As seen in many mainstream press reports, the Obama administration announced in early July that (1) the employer mandate and (2) certain reporting requirements under the Patient Protection and Affordable Care Act (PPACA) will be delayed until January 1, 2015. On July 9, 2013, the Internal Revenue Service (IRS) issued further guidance on the delay.
The delay in enforcement is very welcome news to large employers, as many have commented to the Obama administration that more time was needed to comply with the new rules.1
The Employer Mandate
The employer mandate requires large employers to provide full-time employees with qualifying health coverage that meets certain affordability and minimum-benefit requirements. To the extent that an employer fails to provide qualifying health coverage to its full-time employees, various penalties can be imposed on the employer based on the percentage of full-time employees who are eligible to receive such coverage.2
Due to the delay in enforcement of the employer mandate, employers will have more time to assess how to determine compliance with the affordability and minimum-benefit requirements. The delay also will provide employers more time to design coverage for full-time employees under their health plans so as to either avoid or mitigate health coverage penalties.
PPACA requires large employers to provide health coverage reports and certain health insurance information to the IRS. In particular, a large employer is required to report the number of its full-time employees, whether it offers “minimum essential benefits” under its health plan(s), and its share of the total cost of benefits under its health plan(s).
The IRS has indicated that proposed rules for these reporting requirements are expected to be published in the summer of 2013, and the proposed rules will reflect the fact that enforcement will not occur during 2014.
The Treasury Department has indicated that proposed rules on the reporting requirements are forthcoming. While we await the new guidance, the enforcement delay should allow employers to take a breath and evaluate how to comply with health plan reporting rules and the changes that may be required by the employer mandate to existing health plans with respect to affordability, minimum benefits, and coverage.