Obama Administration Delays ACA Employer Mandate Until 2015

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In a major development in the implementation of the Affordable Care Act (ACA), the Obama administration announced on Tuesday that it will delay implementation of the “employer mandate” feature of the law.

Under the ACA, “large” employers –- those with at least 50 full-time workers -- must offer health insurance coverage deemed “affordable” under the ACA’s standards to all full-time employees (defined under the ACA as employees working a minimum of 30 hours per week), or pay a penalty. (Businesses with fewer than 50 full-time employees are not subject to this requirement.) Until Tuesday, these penalties were scheduled to take effect on January 1, 2014 -- meaning that large employers who failed to offer “affordable” coverage to all ACA-defined full-time employees in 2014 would be subject to the penalty. 

Citing employers’ “concerns about the complexity of the requirements and the need for more time to implement them effectively,” the Treasury Department stated in a blog post released late Tuesday that it would delay by one year the date upon which large employers must self-report on the coverage provided to their employees, and would streamline the reporting requirements.  Furthermore, the employer “shared responsibility payments” –- the penalty for not offering “affordable” coverage to full-time employees –- will not be assessed in 2014. Instead, these penalties will apply beginning in 2015.  

The Department added that employers are strongly encouraged to voluntarily self-report in 2014 in order to ease the transition to mandatory self-reporting in 2015.  The blog post emphasizes that the employer mandate delay does not affect individuals’ access to tax credits and subsidies that will be available on the ACA’s health exchanges, or any other provision of the ACA.

For large employers who currently offer employer-sponsored coverage, this change will offer more time to determine whether their existing coverage meets the ACA’s requirements and implement any applicable changes. For large employers who are undecided whether to offer employer-sponsored coverage pursuant to the ACA’s employer mandate provisions, this change provides more time to analyze the implications of the shared responsibility payment for an employer’s particular workforce and the availability of health insurance coverage through the individual health insurance exchanges to be established pursuant to the ACA.

As always, we will continue to keep you informed regarding the latest healthcare reform developments affecting you and your business.

Topics:  Affordable Care Act, Deadlines, Delays, Employer Mandates, Healthcare, Pay or Play, Reporting Requirements, Shared Responsibility Rule, Tax Penalties

Published In: Health Updates, Insurance Updates, Labor & Employment Updates, Tax Updates

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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