The Obama administration caught the U.S. business community by surprise when it announced a one year delay, until Jan. 1, 2015, in the Patient Protection and Affordable Care Act (PPACA or ACA) mandate that employers with 50 or more full-time-equivalent employees provide health care coverage to their full-time employees (those working on average 30 or more hours per week) or pay steep penalties.
The announcement, by Mark J. Mazur, the assistant secretary for tax policy at the U.S. Treasury Department, was made late in the day on July 2, 2013. Mazur said the mandate's delay is intended to "provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees." He added: "During this 2014 transition period we strongly encourage employers to maintain or expand health coverage. Also, our actions today do not affect employees' access to the premium tax credits available under the ACA (nor any other provision of the ACA)."
The postponement of the employer "shared responsibility" coverage mandate sometimes referred to as"pay or play"- is linked to a delay (announced at the same time) until 2015 in implementing two PPACA penalty-related information-reporting provisions: Section 6055, which requires reporting by insurers, self-insuring employers and other parties that provide health coverage; and Section 6056, which requires reporting by certain employers concerning the health coverage they offer to their full-time employees.
According to the announcement: "We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under Section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015."
In other words, organizations will not face penalties for another year over employees who receive premium tax credits to purchase coverage on a government-run exchange.
However, "Many ACA provisions are unaffected by the delay, and employers must continue to implement and comply with them," advised an analysis by consultancy PricewaterhouseCoopers. "New individual and group health plan requirements taking effect for 2014 plan years include a ban on annual dollar limits on essential health benefits, a 90-day limit on eligibility waiting periods, new out-of-pocket limit maximums, the elimination of preexisting conditions exclusions for adults, and coverage of clinical trial participant costs."
Remaining in place, for instance, are the reform act's requirement that most employer-provided health care includes coverage for recommended preventive care-including contraceptive services for women with no cost-sharing-and the requirement for employers subject to the Fair Labor Standards Act to provide written notices about government-run exchanges to each of their employees and to all new hires by Oct. 1, 2013.
On the other hand, "Employers who were planning to expand coverage to new classes of employees or dependents, or change cost-sharing structures to comply with affordability requirements, can postpone implementation of those changes for up to a year," according to an alert from law firm Nixon Peabody LLP. "Employers may wish to voluntarily comply with the new IRS reporting requirements beginning in 2014 in order to start data collection, and to develop and test IT systems before penalties can be imposed for reporting errors."
United Benefit Advisors has posted a listing of what's been delayed, what remains required in terms of plan coverage, and other PPACA obligations employers still must meet.
Proposed rules implementing the delay in the shared responsibility and information-reporting provisions will be forthcoming, the Treasury's announcement said.