2014 Transition Relief for Large Employers
On July 9th, the Internal Revenue Service (IRS) issued Notice 2013-45, the formal guidance that implements the delay of reporting requirements and key Employer Shared Responsibility provisions under the Affordable Care Act (ACA), which was informally announced on July 2nd. Specifically, both the annual employer and insurer information reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056 – and the assessment of any penalties under Code Section 4980H – the Employer Shared Responsibility requirements – have been delayed until 2015.
Under the ACA:
- Section 6055 reporting will be required by insurers and employers that sponsor self-insured plans on each individual for whom they provide the coverage.
- Section 6056 reporting generally applies to certain large employers with respect to the terms and conditions of health coverage offered to their full-time employees during the prior year.
- Code Section 4980H sets forth the Employer Shared Responsibility (i.e., “play or pay”) provisions regarding the offering of health insurance coverage by large employers to their full-time employees.
Under the ACA, these reporting requirements and the potential assessment of penalties were generally to go into effect in 2014.
On July 2nd, the Treasury (and the White House, through a blog) informally announced that these provisions were going to be delayed until 2015. Notice 2013-45 simply formalizes the delay. According to the IRS, the intention of this transition relief is to provide additional time for:
- Input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the ACA law; and for
- Employers, insurers, and other providers of minimum essential coverage to adapt their health coverage and reporting systems.
What This Means for Employers
No Employer Shared Responsibility penalties will be assessed for 2014 and the 6055 and 6056 reporting requirements have been suspended for 2014. In anticipation of the application of the provisions in 2015, however, the IRS encourages employers to voluntarily comply for 2014 with these information-reporting provisions (once the information reporting rules have been issued) and to maintain or expand health coverage to all full-time employees in 2014.
In the Notice, the IRS notes that: “(r)eal-world testing of reporting systems and plan designs through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2015.”
The Notice specifically notes that the delay does not affect the availability of premium credits for individuals eligible for federal subsidies.
In addition, the Notice clarifies that the announced delay in implementation of the specified notice and penalty provisions of the ACA has no effect on the effective date or application of other ACA provisions at this time. Employers will still need to comply with all other ACA requirements, as applicable, including mandated Form W-2 reporting and distributing required employee communications (e.g., the Summary of Benefits and Coverage and the Notice of Exchange Availability). Employers should continue to evaluate their options under the ACA and monitor changes to these requirements.