On July 2, 2013, the U.S. Treasury Department announced that the implementation of the Pay or Play Rules of the Affordable Care Act (ACA) will be delayed one year until January 1, 2015. However, they cautioned that employers should not delay their compliance planning. The government’s decision to postpone the employer mandate will allow the government to provide more guidance to businesses. The ACA imposes penalties on large employers (defined as those with 50 or more full-time equivalent employees) that do not offer affordable minimum value health plan coverage to their full-time employees.
According to the announcement: “We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under Section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.” This means that organizations will not face penalties until 2015 over employees who receive premium tax credits to purchase coverage on a government run-exchange.
It is important for employers to remember that implementation has only been delayed. These rules have not been repealed. As the Treasury Department noted in its announcement, the implementation of both the penalties and the employer reporting obligations has been delayed to allow employers time to adapt their health coverage and reporting systems to meet the requirements of the ACA. Given the complexity of the Pay or Play Rules, employers should continue to establish their compliance strategies with a sense of urgency.
Equally important to remember, is that the delay in the implementation does not affect any other provisions of the ACA. Therefore, employers must continue to comply with provisions of the ACA already in effect and continue to prepare for compliance with provisions of the ACA set to take effect in the near future. In an analysis done by PricewaterhouseCoopers, it is noted that “many ACA provisions are unaffected by the delay, and employers must continue to implement and comply with them. New individual and group health plan requirements taking effect for 2014 plan years include a ban on annual dollar limits on essential health benefits, a 90-day limit on eligibility waiting periods, new out-of-pocket limit maximums, the elimination of preexisting conditions exclusions for adults, and coverage of clinical trial participant costs.” Additionally, new fees and assessments and a health insurer tax are not affected by the delay.
No Small Cost
It was also noted that this move to delay the mandate will cost $12 billion in lost revenue and additional costs, according to the Congressional Budget Office (CBO). According to the CBO, “one million fewer people will get employer coverage in 2014 as a result of the change, and half of those will turn to new government health-insurance exchanges or Medicaid for coverage.” In a letter written to House Budget Committee Chairman Paul Ryan, the CBO stated that the delay of the employer mandate would result in the loss of a projected $10 billion in employer penalties that would have been assessed in 2014 and collected in 2015. Additionally, costs for insurance exchanges that will allow individuals to sign up for health insurance starting in October will increase by $3 billion.
I would like to thank Caroline Ryder for preparing this article with me. Caroline is a Marketing Analyst with C2G Resourcing, a subsidiary of Consultants 2 Go, LLC. Don’t forget, you can email me at Peggy@Consultants2Go.com with any questions you might have and I’ll be glad to answer them. You can also follow me and my business on Twitter @peggymchale and @consultants2go
Peggy is the co-founder of Consultants 2 Go® (C2G), a consulting firm that provides marketing solutions to Fortune 500 companies in the Financial Services, Telecom, Life Sciences and other industries. Consultants 2 Go was just named to the Inc. 500/5000 List as one of the fastest growing companies in the United States. Prior to starting C2G, Peggy was a Vice President at American Express. She holds an MBA from St. John’s University and a BA from the College of Mount Saint Vincent. She recently served as a member of the Advisory Board for The Academy of Our Lady of Peace, New Providence, NJ.
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