Latest on the Affordable Care Act
July 11, 2013
Last week SBAM reported that the Obama Administration unexpectedly announced on July 2 that the employer shared responsibility payment provisions, generally referred to as the ‘employer mandate‘ or ‘play-or-pay provisions’, will be delayed until 2015.
The Affordable Care Act (ACA) generally requires all employers with 50 or more full-time equivalent employees (FTE) to offer their full-time employees (employees working more than 30 hours a week beginning in 2014) health insurance coverage or pay tax penalties beginning January 1, 2014. These employer shared responsibility payment provisions have been delayed one year until January 2015.
In addition, the mandatory employer and insurer reporting requirements (including identification of full-time employees and their months of coverage) under Internal Revenue Code (IRC) Sections 6055 and 6056 are also delayed for a year. This means that employers will not incur penalties for failing to provide affordable, minimum-value health coverage to their full-time employees in 2014. In addition, insurance carriers and employers are not required to comply with the extensive information reporting for the 2014 calendar year.
What Else Does This Mean?
In reality, this delay means almost nothing to small employers and next to nothing to large employers who already offer coverage to their workforce. It means a great deal to those employers hovering around 50 FTE including employers with variable-hour employees and seasonal employees who they are trying to measure. Additionally, it means that with a few exceptions, including the delay in employer reporting and the delay in the play-or-pay penalties, all of the other provisions of the ACA are moving forward. According to the guidance issued:
- “Both the information reporting and the Employer Shared Responsibility Provisions will be fully effective for 2015.”
- “Proposed rules for the information reporting provisions are expected to be published this summer.”
- “Once the information reporting rules have been issued, employers and other reporting entities are encouraged to voluntarily comply with the information reporting provisions for 2014.”
- “Individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchange (also called Health Insurance Marketplaces) if their household income is within a specified range and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value.”
Further, the guidance suggest that – “This transition relief through 2014 for the information reporting and Employer Shared Responsibility Provisions has no effect on the effective date or application of other Affordable Care Act provisions.” The law’s health insurance market reforms that go into effect as of the first day of the plan year that begins in 2014. Including:
- Individual Mandate – The IRS will monitor compliance with the individual mandate through self-certification on each individual’s tax return. SBAM Comment – self certification in itself is a major change.
- Health Insurance Exchanges/Marketplace – President Obama has stated that open enrollment is still expected to begin on October 1, 2013 for all state-based, partnership and federally facilitated marketplaces. SBAM Comment – We will see … Others in Washington, D.C. are starting to suggest possible delays.
- Employer Notice of Exchange/Marketplace – All employers subject to the Fair Labor Standards Act are required to send a notice to all employees by October 1, 2013. SBAM Comment – make certain that you are ready to go and know that SBAM will have an affordable service that you can use to get this done. More on that later this summer.
- Summaries of Benefits and Coverage – The notices for the coming plan year must include information about whether or not a plan meet the minimum value or minimum essential coverage standards.
- PCORI Fee – For fully-insured plans, the insurance carrier will pay this fee; for self-funded plans the payment responsibility lies with the employer. The first payment of this fee is due by July 31, 2013 for calendar year plans or a plans with a year that ended in October or November of 2012.
- The transitional reinsurance fee and the new national health insurance premium tax – Both will be built into 2014 premiums.
- W-2 Reporting requirements – Still required for employers that issue more than 250 W2s.
- The limit on Health FSA salary reductions of $2,500 per participant.
While nothing in this latest bit of drama suggests that the Affordable Care Act is going away, additional guidance will be needed to understand the full implications of the delay for employers. That additional guidance is promised by the Treasury this summer, and SBAM will be following those developments closely in order to assist you through this maze.
SBAM’s Decision Point is your full resource for everything related to the Affordable Care Act, including: a complete timeline, full time employee equivalent calculator, tax credit calculator, full glossary of terms, individual mandate information, and much more.