On July 2, 2013, the Obama Administration announced a postponement of three Health Care Reform requirements: (1) the penalties assessed against employers under the “Employer Shared Responsibility” provisions; (2) the mandatory large employer reporting requirements; and (3) the mandatory insurer/plan reporting requirements.
Under the Employer Shared Responsibility provisions, beginning January 1, 2014, large employers (ie, those with over 50 full-time employees or their equivalents) could be subject to Shared Responsibility payments (ie, penalties) in two situations:
(i) The employer fails to offer health coverage to its full-time employees (and their dependents) if at least one full-time employee enrolls in a health plan under a State Health Exchange and receives a premium tax credit; or
(ii) The employer offers health coverage to its full-time employees (and their dependents), but at least one full-time employee enrolls in a health plan under a State Health Exchange and receives a premium tax credit because the employer coverage either did not provide minimum value or is not affordable to that full-time employee.
Beginning in 2014, annual information reporting is required by large employers relating to the health insurance that the employer offers (or does not offer) to its full-time employees. The information reporting is integral to the administration of the Employer Shared Responsibility provisions. Once information reporting is filed with the IRS by the large employer and compared to information on employees who receive the premium tax credits under the State Health Exchanges, the IRS will be able to assess the penalties. However, the IRS has not yet proposed rules on the employer reporting requirements.
There is also an annual information reporting requirement imposed on health insurers, self-insured employers, government agencies, and other providers of health coverage. The IRS has not yet proposed rules on these requirements either.
The transitional relief in Notice 2013-45 provides that there will be no enforcement of the Employer Shared Responsibility provisions and there will be no annual information reporting by large employers or insurers, self-insured employers or others providing health coverage to employee and individuals for 2014. For employers, this effectively means that they will not be required to provide health care coverage to employees working an average of 30 hours per week until 2015.
The IRS has announced that the proposed rules for the information reporting provisions will be published this summer. Once published, reporting entities will have time to develop their systems for assembling and reporting the required data. Parties were encouraged to voluntarily comply for 2014 (after the proposed rules are published) to “real-world” test their reporting systems.
The IRS also has indicated that all other provisions of the Health Care Reform law will go forward. This includes the mandate on individuals to obtain health coverage (or pay a fine) and the implementation of the State Health Exchanges, both effective January 1, 2014.