On Tuesday, July 2, 2013, the Obama Administration announced that it will delay implementing the so-called “employer mandate” of the Affordable Care Act from 2014 until 2015.[1] Section 1513 of the Affordable Care Act added section 4980H of the Internal Revenue Code, which, among other things, imposes a tax on “applicable large employers” that fail to offer certain health coverage for full-time employees (and their dependents) if an employee who qualifies for federal subsidies purchases insurance through an exchange.[2] Generally, “applicable large employers” are employers that employ at least 50 full-time employees on business days during the preceding calendar year.[3] The decision to postpone the employer mandate does not affect other significant provisions of the Affordable Care Act.
Mark J. Mazur, the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, asserted that the Internal Revenue Service (the “IRS”) would postpone assessing shared responsibility payments under section 4980H because the Administration would be offering transition relief that would make it impractical for the IRS to determine which employers owed such payments in 2014.[4] He stated that the Obama Administration will provide an additional year before the Affordable Care Act imposes mandatory employer and insurer reporting requirements. The extra year, Mazur predicted, will allow the Administration additional time to examine how it might simplify reporting requirements and give employers an opportunity to adapt their reporting systems as they adjust the costs and the scope of the health coverage that they provide for their employees.
According to Mazur, the U.S. Department of the Treasury will publish formal guidance within the next week and will publish proposed rules implementing sections 6055 and 6056 of the Internal Revenue Code this summer, once it has received comments from stakeholders. Section 6055 imposes certain information reporting requirements for sponsors of self-insured plans, certain private issuers, and some governmental entities on each individual that receives “minimum essential coverage” by such sponsors, issuers, and entities.[5] Section 6056 imposes information reporting requirements on applicable large employers that requires such applicable large employers to provide not only data about employees but also about the employer-provided coverage.[6]
alerie B. Jarrett, a Senior Advisor to President Obama, stated that the postponement was in response to concerns that the reporting process was too complex and that employers needed more time to comply with the rules.[7] She also noted that the shared responsibilities policies of the Affordable Care Act do not apply to small businesses with fewer than 50 workers and that companies with more than 50 employees that do not presently offer quality affordable coverage will have “as much flexibility and transition time as possible” to provide “affordable, quality coverage” to their workers.[8]
- Patient Protection and Affordable Care Act, 124 Stat. 119 (2010), and Health Care and Education Reconciliation Act of 2010, 124 Stat. 1029 (2010) (collectively, the “Affordable Care Act”).
- See 26 USC § 4980H(a).
- Id. § 4980H(c)(2).
- Mark J. Mazur, Continuing to Implement the ACA in a Careful, Thoughtful Manner, U.S. Dept. of Treas. Treasury Notes (Jul. 2, 2013, 5:56 P.M.),
http://blogs.wsj.com/washwire/2013/07/02/statement-administration-delays-employer-health-care-mandate/ - 26 USC § 6055.
- Id. § 6056.
- Valerie B. Jarrett, We’re Listening to Businesses about the Health Care Law, White House Blog (Jul. 2, 2013, 6:00 P.M.),
http://www.whitehouse.gov/blog/2013/07/02/we-re-listening-businesses-about-health-care-law - Id.