It may have been a bitter pill for the Obama administration to swallow, but in early July White House officials announced a one-year delay, until January 1, 2015, in the Affordable Care Act (ACA) mandate that employers with 50 or more full-time-equivalent employees provide health care coverage to their full-time employees or pay penalties. A full-time employee is one who works 30 or more hours per week.
The postponement of the employer “shared responsibility” coverage mandate – also known as “pay or play” – is related to a delay until 2015 in implementing two penalty-related information-reporting provisions. One of the provisions requires reporting by insurers, self-insuring employers and other parties that provide health coverage, and another requires reporting by certain employers concerning the health coverage they offer to their full-time employees.
Consequently, employers will not, for 2014, face the potential $2,000 penalty per full-time employee if they fail to offer minimum essential coverage to all full-time employees and dependents, or the $3,000 penalty per full-time employee who receives subsidized coverage on a public exchange because the employer-provided coverage failed to meet certain affordability and minimum value requirements.
The reason the administration gave for the delay was to allow more time for consideration of ways to simplify the new reporting requirements and for employers to adapt their health coverage and reporting systems.
The administration’s actions do not affect employees’ access to the premium tax credits available under the ACA or any other provision of the law.
The public exchanges are still expected to open on October 1, 2013, to allow individuals and small employers to enroll for healthcare coverage for 2014, and that the subsidies for low- and moderate-income individuals to purchase coverage on the public exchanges also will be provided starting in 2014.
While the “play or pay” penalty has been postponed, employers still have a list of things to do regarding their group health plans and the many other aspects of health care reform which are moving forward. Unaffected by the postponement, for instance, are the reform act’s requirement that most employer-provided health care include coverage for recommended preventive care and the requirement for employers subject to the Fair Labor Standards Act to provide written notices about government-run exchanges to each of their employees and to all new hires by October 1, 2013.
Our firm is holding a workshop on the ACA on September 26 to help keep clients up-to-date on the exchanges and other developments regarding the implementation of the law. Victoria McCoy, president of Crown Benefits, who has previously conducted two workshop sessions for Whalen clients on the ACA, will be the presenter. More details about the program will be sent to clients in September.
Finally, Vorys, Sater, Seymour & Pease has posted on its website an employment alert with implications of the delay of the pay or play penalties. Click here to review.