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The U.S. Treasury Department announced on July 2, 2013, that certain reporting requirements under the Affordable Care Act are being delayed until 2015; consequently, the Employer Shared Responsibility Payment (also known as the Pay-or-Play Penalty) is also delayed until 2015.  In announcing the delay, the Department encouraged employers to use this year as a test run of the 2015 requirements.  The Department stated that other provisions of the Affordable Care Act, including the Insurance Marketplaces and the Individual Mandate, are not impacted by the delay.

What is the Employer Shared Responsibility?

The Employer Shared Responsibility mandate requires that large employers (generally with 50 or more full-time equivalent employees), either provide minimum essential health coverage to full-time employees (those working 30 hours or more per week) or, pay a penalty if at least one full-time employee enrolls in health coverage for which a premium tax credit is allowed or paid.  The Affordable Care Act requires certain information reporting by insurers and other parties that provide health coverage, as well as, self-funded employer plans and large employers.  The Treasury Department is expected to release guidance on these reporting requirements later this summer; however, without the information reporting, the IRS cannot determine which employers should be assessed a penalty.

What Does This Mean for Employers?

The delay means that large employers are not required to expand health coverage to employees who work 30 hours or more per week until 2015 and information reporting (as referenced above) is optional; however, there is still work to be done.  Employers still need to consider updating relevant plan documents, summary plan descriptions, and benefit administration systems to comply with the (now) 2015 requirements.  Employers who will be utilizing a 12-month measurement period to determine the benefit eligibility of variable hour employees (one of the proposed Safe Harbor methods), may still be tracking and reporting on employee hours beginning this fall.  Additionally, the Insurance Marketplaces (also known as Exchanges) are not being delayed.  Employers are required to provide all employees with notice of their right to obtain coverage through the Insurance Marketplace.  Notice must be provided to current employees by October 1, 2013, and thereafter to new employees within 14 days of their employment.

Individual Mandate

Finally, beginning in 2014, individuals, other than those who are exempt under the law for reasons that include, but are not limited to religious beliefs, incarceration, or membership in an Indian tribe, will be required to have and maintain minimum essential health coverage or pay a penalty amount on their tax returns.  The potential penalty begins in 2014 at $95, or 1% of household income, whichever is higher, and increases to $695 or 2.5% of household income in 2016.
We will provide additional updates regarding the information reporting and Employer Shared Responsibility provision of the Affordable Care Act as it becomes available.  If you have any questions in the meantime, please contact the attorneys in our Employment & Labor section.