Skip to main content

Employer Mandate Penalties Delayed Until 2015

The Obama Administration has postponed the Affordable Care Act (ACA) employer mandate penalties for one year, until 2015. The Department of the Treasury announced the delay on July 2, 2013, along with a similar delay for information reporting by employers, health insurance issuers and self-funded plan sponsors.



The delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverage through an Exchange. The Treasury plans to issue more formal information about the delay within a week.



ONE-YEAR IMPLEMENTATION DELAY

The employer mandate provisions of the ACA are also known as the employer shared responsibility or pay or play rules. These rules impose penalties on large employers that do not offer affordable, minimum value coverage to their full-time employees and dependents. They were set to take effect on Jan. 1, 2014.



According to the Treasury, the delay of the employer mandate was required because of issues related to the reporting requirement. With the reporting rules delayed, it would be nearly impossible to determine which employers owed penalties under the shared responsibility provisions. Therefore, these payments will not apply for 2014.



The now-delayed reporting requirements are found in Internal Revenue Code sections 6055 and 6056. 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. The Administration’s decision is based on concerns voiced by businesses about the complexity of the requirements and the need for more time to implement them effectively.



EFFECTS OF THE DELAY

The additional year will give employers time to understand the employer mandate rules, to make decisions about providing health coverage and to adapt their reporting systems, without worrying about potentially significant penalties. It is unclear how the new deadline will impact guidance that has already been issued, such as the transition relief for non-calendar year plans and the optional safe harbor for determining full-time status.



FUTURE GUIDANCE

The administration plans to use the additional implementation time to consider ways to simplify the new reporting requirements consistent with ACA. The Treasury also plans to discuss the rules with stakeholders, including employers that currently provide health coverage to employees, and then publish proposed rules implementing these provisions later this summer. It is the Treasury’s intention to minimize the reporting requirements.



The pay or play regulations issued earlier this year left many unanswered questions for employers. The IRS had highlighted several areas where it would be issuing more guidance. Presumably, the additional time will give the IRS and Treasury the opportunity to provide more comprehensive guidance on implementing these requirements.



HANYS Benefit Services will continue to monitor developments and will keep you informed of the latest updates.

Popular posts from this blog

What is Risk Management? 4 Key Topics to Know

Understanding risk management in retirement programs  Managing a retirement program is complex, with multiple layers of risk. For organizations and their leadership, understanding and mitigating these risks is crucial to ensuring the long-term success and reliability of these programs.   It often leaves human resource professionals, employers and program administrators questioning, "What is risk management, and how can we excel at it?"  This blog post explores the various aspects of risk management in retirement program administration and provides actionable insights to help organizations better manage these risks.  The importance of risk management  Retirement programs are designed to benefit participants and beneficiaries, but they come with their own set of risks. These risks can be broadly categorized into four main topics:  Fees  Administration  Investments  Cybersecurity  Each of these topics requires meticulous attention and ...

Innovative employee retention strategies: 9 fresh ideas

Employee engagement and retention are pivotal in every sector, but they carry even more weight in the not-for-profit space, where resources are often limited. High turnover can be both costly and disruptive, impacting productivity and damaging morale. In an era of workforce evolution, to effectively retain their top talent, organizations must explore innovative employee retention strategies that go beyond conventional methods.  Engaged employees are distinguished by their higher productivity, motivation and loyalty, and they are more likely to stay with a company for the long term. Gallup recently updated its research article, The Benefits of Employee Engagement , finding that "low engagement teams typically endure turnover rates that are 18% to 43% higher than highly engaged teams."  In addition to turnover, disengaged employees negatively impact a company's financial health, with turnover costs averaging six to nine months of the departed employee's salary, accordin...

Executive disability income protection program: C-suite FAQ

Implementing a comprehensive risk management strategy is imperative for C-level executives and senior management at HANYS member hospitals. One critical, but often overlooked component, is the executive disability income protection program. But what exactly is this program and why is it vital for high-income earners?   With increasing interest in executive disability income protection programs from C-suite executives, TruePlan Benefit and Retirement Advisors interviewed Bernard A. Gleeson, Director, Employee Benefit Services on Executive disability income protection programs FAQs.  What is an executive disability income protection program?  An executive disability income protection program (EDIPP) is a specialized form of disability insurance designed to supplement existing group disability plans offered by employers. These individual plans provide additional coverage beyond the typical monthly maximum benefit cap found in traditional employer-based offerings. By ove...