Employer Mandate Penalties Delayed until 2015

The Treasury Department announced a one-year delay of the employer mandate penalties and reporting obligations under the Patient Protection and Affordable Care Act (PPACA).  The employer mandate, also known as the play-or-pay rules, requires employers with at least 50 full-time-equivalent employees to offer affordable, qualifying health coverage to employees who perform at least 30 hours of service per week, or pay stiff tax penalties.  The penalties for failing to offer full-time employees and their dependents minimum essential coverage and for failing to offer full-time employees and their dependents coverage that is affordable and provides minimum value have been delayed until 2015 (not the mandate itself).  Those penalties generally were set to apply as of January 1, 2014.  The delay has two purposes: (1) provide time to simplify the new reporting requirements; and (2) provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.

Employers have an additional year before they must do the following:

1. Determine whether they employ at least 50 full-time equivalent employees and are subject to the play-or-pay rules.
2. Classify employees who work at least 30 hours per week/130 hours a month as full-time for health plan benefit purposes.
3. Adopt measurement/stability periods to track hours for variable hour, part-time, and seasonal employees.
4. Offer minimum essential coverage to 95 percent of their employees who work at least 30 hours a week and their dependents or risk paying a penalty.
5. Determine whether their health plan will meet the affordability standards of the PPACA.
6. Adopt reporting systems so that they can comply with the requirements of the law.

As a consequence of the delay, state-run Marketplaces will not have to verify consumers’ claims that they do not receive health insurance from their employer.  Further, the federal government will rely more heavily on consumers’ self-reported income information, which determines any tax subsidy they receive, until 2015.

The employer mandate has only been delayed, not repealed, and the other provisions of PPACA set to take effect in 2014, including the individual mandate, have not been delayed.  Applicable large employers should continue to prepare for the employer mandate and the information reporting requirements of PPACA.  The health insurance Marketplace is on target to open January 1, 2014, with open enrollment beginning October 1, 2013.  However, it is unclear if the notice employers are required to send to all employees by October 1, 2013 advising them of the Marketplaces will still be required.

ASR Health Benefits will update you on any changes and requirements related to the employer mandate.  If you have questions about this provision of Health Care Reform, call ASR at (616) 957-1751 or (800) 968-2449.