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"Effective Date for Affordable Care Act Employer Mandate and Reporting Requirements Pushed Back"
Tuesday evening, the Obama administration gave some good news to employers who are grappling with the Affordable Care Act's (ACA) so-called Employer Mandate. According to blog posts on whitehouse.gov by senior administration officials, employers will not be required to pay Employer Mandate penalties for 2014. Although formal guidance has not yet been released, the announcement suggests that the temporary suspension of these penalties will apply to all employers for the coming year. Bowles Rice will be reviewing the administration's official guidance when issued, and advising our clients on how this delay will impact employers' ACA compliance efforts for the remainder of the year.
Employers with more than 50 full-time employees were to begin complying with the ACA's Employer Mandate beginning in January 2014. Employers that did not offer affordable minimum coverage to full-time employees were to face potentially steep tax penalties if their full-time employees enrolled in health care coverage through public health insurance exchanges. In addition to the mandate, the ACA imposed parallel reporting requirements on employers, designed to help the government enforce both the Employer Mandate and the Individual Mandate, which is also set to become effective in 2014. The announcement explains that the administration intends to "revamp" and redesign the reporting requirements for employers in an effort to reduce the burdens stemming from these rules. As a result, the administration does not intend to enforce the Employer Mandate penalties for 2014. However, the delay does not apply to other ACA provisions. Most notably, as of now, the Individual Mandate goes into effect in 2014, and the health insurance exchanges are expected to be up and running later this year.
The delay should give employers more time to establish and test systems to comply with the new reporting requirements. More importantly, employers will have the benefit of watching the Individual Mandate and health insurance exchanges go into effect before they are forced to make key decisions relating to the Employer Mandate.