On July 2nd, the Obama Administration announced, via posts on the Whitehouse Blog and the Department of Treasury’s Treasury Notes Blog, that implementation of the Affordable Care Act’s employer mandate provisions will be delayed until 2015.
Under the Affordable Care Act, “large employers,” defined as those employing 50 or more full-time employees, are required to offer affordable health insurance coverage to all full-time employees and their dependents or pay one of two “shared responsibility” penalties.
Some Important Things to Consider
If an employer subject to the “Pay or Play” provisions does not offer health insurance coverage to its full-time employees, it will be subject to a penalty equal to $2,000/year for each full-time employee it employs in excess of the first 30, if at least one full-time employee obtains subsidized coverage through an ACA Health Insurance Exchange.
Alternatively, if such an employer does offer health insurance coverage, but that coverage is not “affordable” or does not provide “minimum value,” it will be subject to a penalty equal to $3,000/year for each full-time employee who purchases subsidized coverage through an Exchange; limited, however, to the maximum penalty imposed for not offering coverage.
To ensure compliance with the “Pay or Play” provisions, the ACA requires certain information reporting by insurers, “large employers,” self-insuring employers, and other parties that provide health coverage. Since the enactment of the ACA, the business community has voiced concerns regarding the complexities and uncertainties of these requirements.
Why the Delay?
Thus, the delay in implementation – which is the Administration’s response to those concerns – is intended to accomplish two goals. First, it will give the implementing agencies additional time to consider methods to simplify the reporting requirements. Second, it will provide employers with time to adapt health coverage and reporting systems to comply with the law.
Because it would be impractical to determine which employers owe “shared responsibility” penalties without the required information reporting, the provisions imposing such penalties are delayed as well. The Administration has promised additional guidance regarding this delay in the near future.
What the Future Holds
Going forward, employers that may be subject to the ACA’s employer mandate provisions should continue to develop and test systems to establish which employees are required to be covered by the employer’s health plan under the law.
This includes electing and implementing the measurement, stability, and administrative periods for determining which employees the law deems as “full-time.”
Additionally, these employers should analyze whether the plan currently offered is “affordable” and provides “minimum value,” as those terms are defined by the ACA. And of course, such employers should continue to monitor the ongoing developments concerning the ACA’s implementation.
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