On July 2, 2013, the United States Department of Treasury announced that there would be a delay of the information reporting requirements and Large Employer Shared Responsibility provisions of the ACA until 2015. This one year delay was confirmed in Internal Revenue Service (IRS) Notice 2013-45 issued on July 9, 2013.
There are two areas of the ACA affected by the delay:
- Reporting requirements. Sections 6055 and 6056 of the ACA provided that insurers, self-insuring employers, government agencies and other providers of health coverage must report certain annual information to the federal government. In addition, these provisions required applicable large employers to report on the health insurance they provide to their full-time employees.
- Shared Responsibility. Section 4980H imposes penalties on large employers (50+ FTEs), either for not offering minimum essential coverage or for offering coverage that is unaffordable or not valuable to full-time (30+ hour) employees.
The reporting provisions and the penalties were originally scheduled to go into effect generally for plan years starting on or after January 1, 2014.
In order to provide additional time for stakeholders to participate in formulating workable guidance and to simplify the reporting requirements, the 6055/6056 reporting requirements and the 4980H shared responsibility requirements are delayed until 2015. The US government expects to issue rules regarding the reporting requirements in 2013. Employers and other entities are encouraged to voluntarily comply with those rules once issued. However, the US government will NOT assess any shared responsibility penalties against employers until 2015. The US government encourages voluntary compliance in 2014 to provide a smoother transition for employers in 2015. Individuals will still be eligible for premium tax credits in the Marketplaces if their household income is within a specified range and they are not eligible for minimum essential coverage, including an employer sponsored plan that is affordable and provides minimum value. All other provisions of the ACA are still applicable.
Key takeaway: Large employers will not be penalized for failure to comply with the Shared Responsibility requirements in 2014; however these employers are strongly encouraged to voluntarily comply with the reporting rules (not yet issued) prior to January 2015. No other provisions of the ACA were changed by this delay. Employers could use this extra time to finalize their processes to ensure a smooth transition in 2015 when enforcement of the reporting requirements and shared responsibility provisions begin.
Guidance for employers in regards to exchange notices
On May 8, 2013, the Department of Labor (DOL) issued guidance on the notice employers are required to provide to their employees on the Marketplaces (Exchanges). Previous guidance suggested that the notices would not be available until late summer/early fall of 2013. However, employers asked for an earlier release of the guidance and notices due to increased employee inquires about the Marketplace. ALL private and public sector employers must provide the notice.
The notice must provide three key points:
- Notification to the employee regarding the existence of the Marketplace and a description of the services provided by the Marketplace, along with contact information.
- Information as to whether the plan offered by the employer is valuable (covers 60% of the costs of benefits) and that an employee may be eligible for a premium tax credit if such employee purchases insurance in the Marketplace.
- Information regarding the loss of employer contribution if the employee purchases insurance in the Marketplace and that the contribution was not taxed.
Employers subject to the notice requirement:
The notice requirement applies to employers who are subject to the FLSA (Fair Labor Standards Act). The FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. It also applies to hospitals, institutions that care for the sick, schools for children with disabilities, all schools and institutions of higher education and all government entities.
Notice provided to:
All employees, regardless of full or part-time status and regardless of plan enrollment status
Timing and delivery:
Current employees: Prior to October 1, 2013; New Employees: At the time of hire, beginning October 1, 2013. Notice to new employees must be provided within 14 days of start date. The notice may be provided by first-class mail OR may be electronically delivered only if the DOL electronic delivery requirements are followed.
Updated COBRA election notice:
Employees eligible for COBRA continuation coverage may want to explore coverage options in the Marketplace rather than elect COBRA. The DOL has updated the model COBRA Election Notice to include information regarding the existence of the Marketplace and the potential premium credits. The DOL did not give an effective date for this Notice.