Affordable Care Act Update: Mandate and Reporting Requirements Delayed until January 1, 2015

Jul 11, 2013 by

By Jamie Couche

On July 2, 2013, the Obama administration delayed the implementation of the Affordable Care Act’s employer health coverage mandate by one year. The “play-or-pay” mandate, which applies to employers with at least 50 full time employees, will force employers to offer affordable health coverage to employees who perform a minimum of 30 hours of service per week or pay tax penalties in lieu of providing such coverage. The mandate was previously scheduled to become effective January 1, 2014, and is now deferred until January 1, 2015.

The delay is in response to concerns raised by employers and other stakeholders regarding the complexity of the “play-or-pay” regulations, the need for more time to implement reporting systems and other related issues. The administration intends to use the one-year delay to simplify the insurer and employer reporting requirements, and provide employers time to adapt health coverage and reporting systems to comply with the new mandates. The Treasury Department intends to issue formal guidance describing the transition this summer. Despite the one year delay, the administration encourages employers to maintain or expand health coverage and to implement voluntary information reporting in 2014 so that such early reporters will assist with the nation’s implementation and transition in 2015.

Please keep in mind that this one year delay does not affect other provisions of the Affordable Care Act set begin on or before 2014, such as:

  • a 90-day maximum on eligibility waiting periods;
  • monetary caps on annual out-of-pocket maximums;
  • total elimination of lifetime and annual limits (including expiration of waivers that permitted certain “mini-med” plans and stand-alone Health Reimbursement Arrangements to stay      in place through plan years beginning in 2013);
  • new wellness plan rules;
  • revised Summary of Benefits and Coverage templates;
  • Patient Centered Outcomes Research Institute (PCORI) excise taxes and transitional reinsurance program fees;
  • a notice informing employees of  the availability of the new health insurance Exchanges (a model notice is available on the U. S. Department of Labor website); and
  • insurance market reforms.

With respect to individuals, the delay does not affect the individual mandate requiring most individuals to purchase insurance by January 1, 2014, or pay a tax penalty. Open enrollment for the health insurance Exchanges is still scheduled to begin October 1, 2013. Under the Exchange provisions, lower-income individuals can qualify for a federal subsidy if their employer does not offer health coverage that meets minimum value requirements and is “affordable” when measured as a percentage of their household income.

Employers who have taken steps towards complying with the mandate may postpone their implementation or proceed with the implementation even though it will not be enforced until 2015.  Each employer should determine the best option for them based on the steps taken to date, which may have included investing time or money towards compliance, advising employees of proposed changes, expanding coverage or restructuring their health insurance benefits program. Regardless of whether employers have taken steps towards compliance, they should utilize the delay to develop a plan to either (1) restructure ownership, work schedules and other related issues to avoid the new coverage requirements, or (2) implement the mandate and comply with the new requirements as instructed by the administration and Treasury Department.

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