ACA – One Year Extension of the Employer Mandate
The Patient Protection and Affordable Care Act (PPACA) was passed on March 23, 2010. The law mandated that on January 1, 2014 employers with more than 50 full-time equivalent employees offer health insurance coverage to employees that meets the minimum standards established by the law or be subject to penalties and fines.
In a surprising move on July 2, 2013, regulators announced that the effective date of the employer mandate rules of the PPACA will be delayed one year until January 1, 2015. This means that on January 1, 2014, employers with more than 50 full-time equivalent employees WILL NOT be obligated to provide health insurance coverage to their employees and WILL NOT be subject to penalties or fines if they do not provide health insurance coverage. This does not imply that employers with more than 50 full-time equivalent employees who currently offer health insurance should discontinue offering this benefit. Employers should keep in mind that the other provisions of the PPACA scheduled to take effect on January 1, 2014, such as the prohibition of pre-existing conditions exclusions for adults and the prohibition of annual dollar limits on essential health benefits, have not had their effective dates modified.
According to the announcement, the delay in implementing the play or pay provision is mainly due to the administration's decision to postpone implementation of the new employer and insurer reporting requirements. The administration states that the transition relief would make it "impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014."
The announcement noted that the administration has been engaging in a dialogue with businesses and has heard a lot of concerns about the complexity of the mandatory employer and insurance reporting requirements and the need for more time for proper implementation. Additionally, the administration revealed that the delay in the reporting requirements is designed to:
- Allow them to consider ways to simplify the new reporting requirements consistent with the law; and
- Provide "time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees."
Regulators have indicated that further details and clarification will be forthcoming regarding the delay of the employer mandate and any other provisions of the law that may be affected by this delay.
The full announcement can be found on the US Department of the Treasury's website.