The postponement of Affordable Care Act (ACA) employer mandate penalties until 2015

July 22, 2013
By Salvatore J. Armao, CPA/PFS, CFP, CFE

Salvatore J. Armao

In response to concerns expressed by businesses regarding the complexity of the requirements and the need for more time to implement them effectively, the Department of Treasury announced on July 2, 2013 the postponement of Affordable Care Act (ACA) employer mandate penalties until 2015. The one year delay comes with a similar deferment of information reporting by employers, health insurance issuers and self-funded plan sponsors.

It is important to note that this delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverage through a Health Insurance Exchange and the individual mandate, which requires that most individuals have a comprehensive health insurance policy or be faced with paying a tax penalty.

Defining the Affordable Care Act (ACA)

ACA is a federal statute signed into law in March 2010 as a part of the healthcare reform agenda of the Obama administration. Signed under the title of “The Patient Protection and Affordable Care Act,” the law included multiple provisions that would take effect over a matter of years, including the expansion of Medicaid eligibility, the establishment of health insurance exchanges and prohibiting health insurers from denying coverage due to pre-existing conditions.

Explaining the Delay

The employer mandate provisions of the ACA are also known as the “employer shared responsibility” or “pay or play” rules, which impose penalties on large employers who fail to offer affordable, minimum value health coverage to their full-time employees and dependents. These rules apply to insurers, self-insuring employers and other parties that provide health coverage, along with certain employers with respect to health coverage offered to their full-time employees.

Originally set to take effect on Jan. 1, 2014, the additional year will give employers time to understand the employer mandate rules; make decisions about providing health coverage; and adapt their reporting systems, without the added concern of expected significant penalties.

What’s Next?

The Obama administration intends to use the extended implementation time to consider ways to simplify the new reporting requirements consistent with ACA. Similarly, the Treasury plans to discuss the rules with stakeholders, including employers who currently provide health coverage to employees. Proposed rules implementing these provisions can be expected later this summer. Presumably, the additional time will give the IRS and Treasury the opportunity to provide more comprehensive guidance on implementing pay or play regulations.

Still confused?

Feel free to contact the professionals at Armao LLP at 516.320.7220 or to help you wade through the what’s delayed; what’s not delayed; current and future provisions; information reporting requirements; pay or play requirements; and other concerns you may have.

July 22, 2013

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