IRS Issues Guidance on Delay of Enforcement of Employer Mandate

By Larry Grudzien, JD

August 12, 2013 – The IRS issued Notice 2013-45 on July 9, 2013, which provided guidance on the delay of enforcement of the employer mandate under the Affordable Care Act (ACA). This guidance followed the July 2, 2013 announcement from Mark J. Mazur, Assistant Treasury for Tax Policy at the U.S. Department of Treasury, of the delay until 2015 of the employer health insurance reporting requirements.

The Notice addresses the delay until 2015, and encourages employers and other reporting entities to voluntarily comply in 2014 with the reporting provisions.

It adds that this delay has no effect on the effective date or application of other Affordable Care Act Provisions. Thus, for example, the delay does not apply to the individual mandate, which takes effect in 2014.

Everyone is confused and wondering what ACA provisions are delayed and what ACA provisions remain in force. The following is a brief summary:

What ACA requirements are delayed in 2014?

*Employer Mandate: Employers must offer coverage to employees who work on average 30+ hours per week or be subject a penalty.

*Affordability: Coverage must be affordable to avoid a penalty (i.e., the employee’s share of the coverage cost cannot exceed 9.5% of the employee’s household income).

*Minimum Value: Coverage must provide minimum value to avoid a penalty (although this requirement is waived, employer must still report whether a plan provides minimum value on the SBC).

*Certain Reporting Requirements: Employers (and insurers) must provide information regarding employees and coverage in order to facilitate enforcement of the employer mandate.

What ACA requirements remain effective in 2014 for employers?

*SBC: Summaries of Benefits and Coverage must be distributed during open enrollment for the 2014 coverage period and must indicate whether the plan provides minimum value.

*Exchange Notices: Employers must distribute exchange notices to employees by October 1, 2013, and thereafter to new employees upon hire.

*Application for Advance Premium Credits: Employers are required to complete a 12 page form entitled, “Application for Health Coverage and Help Paying Costs” when requested by employees who are applying for advance premium tax credits when purchasing coverage on the market.

*ACA Fees: Patient-Centered Outcome Research Institute Fees (“PCORI Fees”) must be paid in July 31, 2013 for years ending before January 1, 2013. The first Transitional Reinsurance Fee must be paid on or before January 15, 2015.

*W-2 Reporting: Employers must continue to report the aggregate value of health coverage on Forms W-2 The rules for 2013 will be the same as applied for 2012.

*Counting Period for Employer Mandate: Employers that need to determine whether they will be subject to the employer mandate in 2015 (50 or more full-time or full-time equivalent employees in 2014) will need to record employee hours in 2014. It is not yet clear whether a short counting period will be available which means that employers may wish to track hours on a per-employee, monthly basis beginning January 1, 2014.

*Measurement Period for Employer Mandate: Employers will need to count employees and record hours over the applicable measurement period to determine which employees are eligible for coverage offers effective January 1, 2015, under the employer mandate. It is not clear whether the transitional measurement period will no longer be available and employers may want to count hours over a 12-month Standard Measurement Period commencing November 1, 2013. This would afford employers a two-month administrative period at the end of 2014 in which to evaluate eligibility data and extend coverage offers to eligible employees. It is not clear whether the employer mandate will be effective on January 1, 2015 or the renewal date in 2015.

*Benefit Mandates For All Plans: Plan design requirements for all plans continue to apply (e.g., maximum 90-day waiting period, no limits on pre-existing conditions or essential health benefits, and expansion of wellness incentives).

*Benefit Mandates for Non-Grandfathered Plans Only: Plan design requirements for non-grandfathered plans only continue to apply (e.g., limits on out-of-pocket maximums, coverage for clinical trial-related services, and provider nondiscrimination, and for small group health plans, limits on annual deductibles).

What ACA requirements for individuals remain effective in 2014?

*Individual Mandate: Individuals must have health care coverage or pay a penalty.

*Exchanges: Public exchanges are still scheduled to offer coverage effective January 1, 2014.

*Subsidies: Premium subsidies will be available to help eligible individuals buy policies on the exchange.

A link to Notice 2013-45 is provided below: http://www.irs.gov/pub/irs-drop/n-13-45.PDF

Larry Grudzien is an attorney practicing exclusively in the field of employee benefits. He has experience in dealing with qualified plans, health and welfare, fringe benefits and executive compensation areas. He has more than 35 years of experience in employee benefit law and is an adjunct faculty member of John Marshall Law School’s LL.M. program in employee benefits and at the Valparaiso University School of Law, where he teaches a number of courses.