Affordable Care Act – Delay of Pay-or-Play Penalties Announced
Late on Tuesday, July 2, 2013, the Treasury Department announced that the health care reform “pay-or-play” penalties for employers that were set to take effect in 2014 will be delayed until 2015. The Administration also announced the delay of certain employer and insurance carrier reporting requirements. The Treasury Department made the announcement through a press release, which indicates that formal guidance will be issued “within the next week” and further stated “we strongly encourage employers to maintain or expand health coverage.” The announcement states that other provisions of the Affordable Care Act (ACA) are not affected, meaning that the announcement does not affect the “individual mandate” or change the requirement that all employers who offer coverage must do so in a manner that complies with other provisions of the ACA.
To expand coverage to many without it, the ACA imposes “shared responsibility payments” on employers of more than 50 employees who do not offer coverage (“pay-or-play”) and also on most individuals who do not have coverage (“individual mandate”). The Treasury Department’s announcement delaying enforcement of the pay-or-play rules until 2015 has already caused many to urge that enforcement of the individual mandate also be delayed, particularly in light of uncertainty as to how the state and federal insurance exchanges will open in the fall and operate in 2014. More information regarding the exchanges is anticipated over the next few months.
The delayed implementation of these ACA reporting requirements, and the associated pay-or-play penalties, provides employers with additional time to assess their current health coverage offerings and evaluate their systems for meeting the reporting requirements.