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Executive Summary: The Obama Administration has released formal guidance on the delay of the Affordable Care Act's (the "ACA") employer mandate and certain reporting requirements.
Under the ACA's employer mandate, an employer with 50 or more full-time employees generally must offer minimum essential health coverage that provides minimum value and is affordable to its full-time employees or it will be assessed a penalty (the shared responsibility payment) if one or more full-time employees obtains coverage from a state or federal health insurance exchange and is eligible for a subsidy or cost-sharing reduction. Sections 6055 and 6056 of the Internal Revenue Code ("IRC") require employers to report information about the health coverage offered to their full-time employees. The IRS plans to utilize employer reporting under IRC §§ 6055 and 6056, among other things, to determine whether the employer will be assessed a penalty under the employer mandate.
On July 9, 2013, the IRS issued Notice 2013-45, http://www.irs.gov/pub/irs-drop/n-13-45.PDF, which delays reporting under IRC §§ 6055 and 6056, and consequently, the penalties under the employer mandate until 2015. Among other things, the Notice provides that:
The Bottom Line: Employers who fail to offer minimum essential coverage that provides minimum value and is affordable to its full-time employees under the ACA's employer mandate in 2014 will not be subject to a penalty. The penalty is expected to apply starting on January 1, 2015. Employers must still comply with the other provisions of the ACA, including requirements regarding the type of coverage that must be provided (such as women's preventive care and the elimination of pre-existing condition exclusions), Form W2 Reporting and distribution requirement such as distributing a Summary of Benefits and Coverage and Notice of Coverage Options.
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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