Law Reports

Health Care Reform: The Employer Mandate and Reporting Requirements

Many employers remain confused about health care reform, and how their business will be impacted. One of the most important parts of the law is the employer’s “shared responsibility” role, in which employers are required to provide affordable health insurance coverage to their staff. However, “this pay-or-play” mandate has been postponed, providing employers more time to understand and comply with the law.

Reporting Requirements

Employers and other reporting entities will be provided additional time to provide input and feedback on ways to simplify information reporting, while remaining consistent with the law. Known as “transition relief”, it is intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting systems.

In anticipation of the application of the provisions in 2015, however, the IRS encourages employers to voluntarily comply for 2014 with these information-reporting provisions (once the information reporting rules have been issued) and to maintain or expand health coverage to all full-time employees in 2014.

Employer Mandate (employers defined as “large” by the ACA)

No “Employer Shared Responsibility” penalties will be assessed for 2014 (the piece of the law requiring employers to provide all employees with affordable coverage). Large employers who do not offer coverage or who offer coverage that does not meet the ACA’s definition of affordable will not be penalized in 2014. However, these employers need to be ready to comply for 2015.

Individual Mandate

The individual requirement, which is effective January, 1, 2014, has not been delayed. Under the individual requirement, U.S. citizens and legal residents are required to carry health insurance or pay a penalty tax. It is expected that the set-up and operation of the new insurance marketplace, called “The Exchange,” will continue in each state.

Premium Credits through the Exchange

The delay does not affect the availability of premium credits for individuals eligible for federal subsidies. Individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchanges (also called Health Insurance Marketplaces), if:

a) Their household income is within a specified range; and,

b) They are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value.

Benefits eligibility for full-time employees/Hours Tracking

The ACA defines a full-time employee, for the purpose of benefits eligibility, to be one working an average of 30+ hours per week. Due to the delay of the employer mandate, employers will not be required to comply with this definition in 2014. There is no need for employers to track hours in 2013 to determine eligibility for 2014, or to decide on a measurement, administrative, and stability period.

Maximum waiting period

The delay does not affect the maximum waiting period rules effective January 1, 2014. The ACA requires that an employer must not have a waiting period that is longer than 90 days. Note that some states, such as California, may have more stringent laws.

Although the two items being delayed are significant, we recommend that employers continue their diligence with understanding and preparing for the implementation of Health Care Reform provisions in 2014, through 2020.

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