Pay or Play and Health Insurance Reporting Delayed until 2015

As we reported to you last week, on 7/2/2013, the Treasury Department announced a one-year delay of the Pay or Play rules and the Pay or Play reporting requirements (that would have taken place in 2015 for 2014). Penalties for not offering coverage to full-time employees and dependents, and penalties for not offering affordable, minimum value coverage have been delayed until 2015. The Treasury Department noted that their actions do not affect access to premium tax credits or any other provision of the ACA.

Take note; the delay (applicable only to the employer mandate) does not affect the individual mandate. Individuals (such as employees) will need to secure coverage for themselves by 2014, or pay a penalty. That means employees will look to their employers to offer affordable, health plans. Additionally, The PCORI tax, the tax on plans to fund a temporary reinsurance program, the 90-day limitation on waiting periods, the prohibition on preexisting condition exclusions, the Exchange Notice, the prohibition on annual and lifetime dollar limits, as well as other health insurance reforms have NOT been given a one-year delay in this announcement. Formal guidance implementing the delay is to be published soon.

According to the announcement, Treasury heard concerns about the complexity of the new employer and insurer reporting requirements under ACA and the need for more time to implement them effectively. The reporting is critical to the enforcement of Pay or Play by IRS. The IRS advisory group, whom our industry partner serves on, has been urging IRS to provide sufficient guidance on the reporting requirements at least 18 months in advance of the effective date to ensure that systems can be implemented and adequately tested. Proposed reporting rules are expected to be published this summer.

According to the announcement, the one-year delay is designed to meet two goals. First, it will provide time to simplify the new reporting requirements. Second, it will provide time to adapt health coverage and reporting systems while employers move toward adjusting health coverage to be compliant.

The delay signals that the Administration is open to hearing from the employer and plan sponsor community about the burdens associated with the Pay or Play rules.

Detailed implications of the announcement will share as they became available.

IMPORTANT: This is a delay and not a repeal of Pay or Play. Efforts to understand the Pay or Play rules should continue in full force. Caprock HealthPlans compliance department continues to work closely with trade groups, consultants, ERISA attorneys, legislators and other ACA experts to keep our clients up to date and educated on the coming ACA implementation. If you have any questions please feel free to contact us directly and we can discuss the impact of this delay for you.

This communication is designed to provide a summary of significant developments to our clients. Information presented is based on known provisions. Additional facts and information or future developments may affect the subjects addressed. It is intended to be informational and does not constitute legal advice regarding any specific situation. Plan sponsors should consult and rely on their attorneys for legal advice.