While most Americans were planning for a weekend filled with food, fun, and fireworks, the Treasury Department got the party started a little early on July 2 with an announcement on their online blog that the Obama Administration intended to delay enforcement of the employer mandate provision of the Affordable Care Act for one year. And the fireworks began! News agencies coast to coast reported that the Affordable Care Act implementation had been delayed. The last few sentences of the Treasury blog entry, however, were more telling, stating that, “…our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA).”
So here’s the real news flash: implementation of the Affordable Care Act has not been delayed, only certain specific provisions of the law. This is an important distinction; the failure to recognize this could be very costly for your business.
In the interest of clarity, it should be noted that the decision to delay enforcement of the Employer Shared Responsibility Provision, (section 4980H), also known as “the play or pay rules” was predicated on the fact that the informational reporting requirements applicable to insurers, self-insuring employers, and other providers of minimum essential coverage under section 6055 of the Internal Revenue Code, and the informational reporting requirements applicable to large employers under section 6056, were delayed out of necessity. The rules for reporting under these two sections have not yet been proposed or drafted, much less finalized, and without this reporting the assessment of section 4980H penalties against an employer is impossible.
Guidance on the “transitional relief” from reporting and penalties, issued on July 9,
(Notice 2013-45), states that the “transitional relief [also] is intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting systems.” It goes on to state, “both the information reporting and the Employer Shared Responsibility Provisions will be fully effective for 2015. In preparation for that, once the information reporting rules have been issued, employers and other reporting entities are encouraged to voluntarily comply with the information reporting provisions of 2014.”
What the Treasury blog, press releases, and guidance on this transitional relief did not make clear is crucially important, however, and is mentioned in the blog. It is again alluded to in the guidance issued which states, “This transitional relief…has no effect on the effective date or application of other Affordable Care Act Provisions…” To put it as simply as possible: the implementation date for all other aspects of the Affordable Care Act has not been delayed. Most importantly, the implementation of the minimum value and affordability requirements for large group employer plans is still January 1, 2014, unless the group meets certain requirements which would afford the group “transitional relief” until their renewal date in 2014, not 2015. If a large group does not put minimum value, affordable coverage in place at their renewal date in 2014, nothing in this new delay affords additional time to do so. Unless the group’s renewal date is January 1, 2015, the employer would be subject to section 4980H penalties beginning January 1, 2015, and until the group’s renewal date in 2015. This would be the next opportunity to bring the group’s plan offerings into compliance with the minimum value, affordable standards required under the ACA.
The delay in the reporting and penalty provisions gives groups a little breathing room, but it does not suspend the need to ascertain the group’s size and position in the market, discern “controlled group” status of affiliated companies, determine the status of variable hour employees, adjust to a compliant waiting period, streamline employer data collection and reporting capabilities, and conform to or implement a myriad of other requirements under ACA. Perhaps most importantly, it does not delay the need for large groups to determine their strategy with regard to offering minimum value, affordable coverage, thereby influencing employees’ decisions with regard to purchasing coverage in the Exchanges in 2014, and avoiding the resulting penalties in the not-too-distant future.
Joan Galletta earned her law degree from The University of Florida College of Law, and has been an Employee Benefits Consultant with JP Perry Insurance, Inc. for the past 10 years. She is currently Chairperson of the National Legislative Council for the National Association of Health Underwriters, and has served on that Council for four years. The Council is responsible for reviewing and commenting on PPACA regulations on behalf of NAHU. Joan also serves on the Florida Health Insurance Advisory Board. She was appointed to that board by Insurance Commissioner Kevin McCarty in 2006. Joan can be contacted at email@example.com