One month ago, the Treasury Dept. announced that it is delaying the Affordable Care Act’s employer “shared responsibility” reporting obligations and penalties for one year. For those who are not regular readers of this blog, I have referred to the act’s employer “shared responsibility” section as the “Employer” Mandate (or “play or pay section).
The employers’ reporting obligations – that were to go into effect on January 1. 2014 – were significant. They were designed to help determine whether employers are actually complying the Employer Mandate. The Treasury Dept. felt that employers needed more time to meet the reporting obligations…namely under Section 6055 of the Internal Revenue Code…so it excused reporting for 2014. Without any way for the government to determine which employers complied with the Employer Mandate, they cannot assess penalties. Therefore, it made no sense to impose the Employer Mandate section at all.
These changes do not mean that the Affordable Care Act has been repealed. Exchanges are still targeted to open on October 1, 2014. Employers are still required to provide information to employees on their health care options before October 1, 2013. As of January 1, 2014, individuals
- are still required to obtain qualifying coverage or face penalties (“Individual Mandate”)
- will be eligible for premium subsidies through these exchanges if their household income is within a specified range and they are not eligible for comprehensive and affordable health coverage through their employer.
The problem comes in that the government cannot now determine who is and who is not actually eligible for those premium subsidies. So, in 2014, while the Individual Mandate has not been delayed, the government will simply accept the individual’s own representation about the availability of employer coverage and his/her household’s income.
This can expose you to governmental audits and other forms of scrutiny. Employers will:
- Not be notified which employees qualified for insurance exchange subsidies in 2014
- Be open to audits in 2015 if they enact a health care plan to pull already subsidized employees off of an exchange.
As January 1, 2014 approaches, the questions wrapped about ACA compliance become more confusing and urgent. In order to fully protect yourself, you still need to determine
- Whether you are a large employer
- Whether you should voluntarily comply with the Employer Mandate in 2014
- A strategy to fully comply with the Employer Mandate in 2015
At Snelling, we are working to have the right answers for you at the right time. No one really has all the answers yet; everything is simply changing too much to concretely state a position and/or a definitive solution. However, we can provide you the information you need to stay informed on the issues, and, when the time is right, to help you formulate a sound, strategic plan that meets the requirements of the ACA and helps you grow your business.