Yesterday, the Obama administration announced that it is delaying enforcement of certain parts of the Affordable Care Act (“ACA”) that were scheduled to take effect January 1, 2014. The enforcement date has been delayed until January 1, 2015.
The ACA’s so-called “employer mandate” requires companies with 50 or more workers to provide health benefits to full-time employees or pay a “shared responsibility” penalty of $2,000 per employee. The law also contains certain mandatory reporting requirements for employers and insurers designed to help regulators enforce the employer mandate. In response to concerns from large employers regarding the difficulty of implementing the complex reporting requirements on time, the administration has decided to delay the above requirements for one year, giving companies more time to adjust and giving the IRS more time to simplify the requirements. The Treasury Department also delayed enforcement of the employer shared responsibility penalties until 2015, acknowledging that the delay in information reporting would make it difficult to determine which employers are subject to the employer shared responsibility penalties in 2014. Other provisions of the ACA are not impacted by the announcement, including the “individual mandate” requiring individuals to obtain health coverage and the establishment of state exchanges where individuals can purchase such coverage.
Despite the delay, the Treasury Department will “strongly encourage” employers to voluntarily implement the reporting requirements in 2014 in order to facilitate a smoother implementation process in 2015. According to Mark Mazur, assistant secretary for tax policy at the Treasury Department, the department will publish formal guidance describing the transition within the next week. A good business practice is to continue efforts to comply with the ACA as we wait for formal guidance regarding the transition.