Delay in ACA Employer Mandate: Opportunity to Regroup

The bombshell July 2 announcement came in the form of a blog post on the U.S. Treasury Department’s website, accompanied by a statement issued from the White House. The employer “shared responsibility” provision is being delayed one year, until 2015. The move was described, essentially, as a consequence of the IRS’ failure to provide employers and health plans with guidance for their reporting obligations under Sections 6055 and 6056 of the Affordable Care Act (ACA).

Those sections cover the detailed information the IRS will require about the health plans offered to employees. Without guidance concerning what to report, the IRS would not have a way to measure whether or not employers are complying with their obligations under the law.

Nevertheless, the government doesn’t want to the delay to cause employers’ efforts to comply with the reporting requirements to grind to a complete halt. “Once these rules have been issued,” wrote Mark Mazur, the Treasury Department’s Assistant Secretary for Tax Policy, “the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.”

Mazur also promised “formal guidance describing this transition” would be issued the week of July 8 and detailed rules on reporting will be issued sometime in the summer.

Finally, a statement from the White House said the government is still moving “full speed ahead” on opening the health exchanges on time.

Note: The Obama Administration also announced that it would not require the new insurance marketplaces to verify the income and health insurance status of consumers in 2014. Instead, it would rely on what consumers report themselves in 2015, when better verification systems would be in place.

Not All ACA 2015 Tasks Postponed

Some employers may wrongly conclude that all aspects of healthcare reform are postponed. Keep in mind that employers face other compliance requirements during or by the end of 2013. Examples include (if applicable):

  • Reducing waiting times for plan eligibility to no more than 90 days;
  • Complying with the rules for the Patient-Centered Outcomes Research Institute (PCORI) fee;
  • Notifying employees about the availability of state exchanges; and
  • Gearing up for more changes which take effect next year.

Opportunity for Course Reversal

The delay does, however, create an opportunity for employers to reconfirm whether the pay-or-play decision strategy they mapped out for 2014 is still the best path. Chances are, nothing has changed since the original decision that would indicate the need for a new course.

This may not always be the case.

For example, suppose you decide to reduce many employees’ working hours below the 30-hour coverage threshold. Suppose also, those plans became known, and you encountered a stronger-than-expected backlash. Employees told you they would rather give up health coverage than see their hours cut. Or perhaps you worry about getting a surge in orders and need to increase part-time employees to 30+ hours per week for a while, throwing a wrench in the works. This breather allows time to reconsider how to proceed.

For more information, or to discuss your situation in detail, please feel free to give our office a call at 402.423.4343.

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