Alerts and Updates

Obama Administration Delays ACA Employer Reporting and Penalties for 2014

July 3, 2013

The transition relief for 2014 is also extended to the shared responsibility payments, meaning that the employer shared responsibility payments will not apply until 2015.

In a July 2, 2013, blog posting on the U.S. Department of the Treasury website titled "Continuing to Implement the ACA in a Careful, Thoughtful Manner," the Obama administration announced that it will provide an additional year before the Patient Protection and Affordable Care Act's (ACA) mandatory employer and insurer reporting requirements begin. These reporting requirements, which were originally scheduled to go into effect on January 1, 2014, will now be delayed until January 1, 2015. More significant is the fact that the Obama administration acknowledges that the delay in the reporting requirements will make it impractical to determine which employers owe shared responsibility payments for 2014. Therefore, the employer shared responsibility provisions will also not be applicable until 2015.

The blog posting by Mark J. Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, states that the additional year with respect to the reporting requirements is designed to meet two goals: First, it will allow the administration to simplify the new reporting requirements in a manner consistent with the ACA; second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible to their employees. Formal guidance regarding the transition relief is anticipated by the administration within the next week.

Beginning in 2014, the ACA had required information reporting by insurers, self-insuring employers and other parties that provide health coverage. It also required information reporting by large employers with at least 50 full-time equivalent employees with respect to the health coverage offered to their full-time employees. The Obama administration states that it expects to publish proposed regulations implementing these provisions this summer. Once such regulations have been issued, the administration will work with employers, insurers and other reporting entities to encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. The administration believes that real-world testing in 2014 will contribute to a smoother transition to full implementation in 2015.

The blog post states that the Obama administration recognizes this transition relief with respect to the reporting requirements will make it impractical to determine which employers owe shared responsibility payments for 2014. Accordingly, the transition relief for 2014 is also extended to the shared responsibility payments, meaning that the employer shared responsibility payments will not apply until 2015. This will provide employers with an additional year to work with the their brokers, insurance carriers and employee benefits counsel in deciding how to address the ACA and its potential penalties for the failure to offer coverage or offering unaffordable coverage to full-time employees.

The Obama administration states that it will "strongly encourage employers to maintain or expand health coverage" during the 2014 transition period. This transition relief is limited to the information reporting requirements and employer shared responsibility payments only and does not impact any other provision of the ACA (including employees' access to the premium tax credits available under the ACA in 2014).

About Duane Morris

Duane Morris attorneys in the Employment, Labor, Benefits and Immigration Practice Group will continue to monitor these key developments related to the implementation of the ACA and will provide an updated Alert after the guidance referenced in the July 2, 2013, blog posting is published.

For Further Information

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.