Employers Given an Extra Year to Comply with the Affordable Care Act’s Shared Responsibility and Reporting Mandates

What you need to know:

Employers have been given an additional year to comply with the shared responsibility provisions (also known as the “play or pay mandate”) of the Patient Protection and Affordable Care Act.  The mandate will not take effect until January 1, 2015. 

What you need to do:

Although employers will not be subject to the shared responsibility penalties in 2014, they will still need to address Affordable Care Act requirements that have not been delayed, such as the new Patient-Centered Outcomes Research Fee, which are outlined in our prior Choate Alert on the Affordable Care Act.

The Delay in the Implementation of the Shared Responsibility Mandate

On July 2, the Department of Treasury announced that the employer shared responsibility penalties (under Internal Revenue Code Section 4980B) will not apply for 2014.  Instead, employers will have an additional year—until January 1, 2015—before they are required to provide healthcare coverage to employees or pay penalties under the Affordable Care Act. 

Under the shared responsibility mandate, employers with 50 or more full-time employees and full-time equivalents (on a controlled group basis) in the prior calendar year will be required to either offer at least 95% of their full-time employees and their children health coverage meeting certain standards or pay employer shared-responsibility penalties. 

In its announcement and in Notice 2013-45 issued the following week, the Treasury Department also delayed by one year certain reporting requirements, so that first information returns will now be filed in 2015.  These reporting requirements include annual information reporting by health insurance issuers and self-insuring employers and separate annual reporting for large employers regarding the health coverage offered to their full-time employees.  This large employer filing requirement is intended to assist the IRS in determining whether an employer is subject to the shared responsibility penalties. 

According to the announcement, the reason for the delay is the complexity of the reporting requirements and the need for more time to effectively implement them.  It appears, however, that implementation of the individual mandate and related penalties will not be delayed and will still be effective in 2014.

Choate will continue to monitor the implementation of Affordable Care Act provisions and will notify you of any developments that may impact your obligations as an employer.


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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