Legal Alerts

12 Jul 2013

Delay of Health Care Reform Employer Reporting and Penalties

THIS DELAY OF HEALTH CARE REFORM REQUIREMENTS AFFECTS ONLY THE EMPLOYER REPORTING AND PENALTIES, AND DOES NOT AFFECT ANY OTHER PROVISION OF THE HEALTH CARE REFORM REQUIREMENTS. INDIVIDUALS ARE STILL REQUIRED TO HAVE COVERAGE IN 2014 OR PAY A PENALTY.

July 9th, the IRS released transition guidance in the form of Notice 2013-45 postponing the enforcement of the employer and insurer reporting required by health care reform until 2015. Curiously, after thousands of pages of statutes and regulations, Notice 2013-45 is three pages long. The specific reporting requirements that will be voluntary until 2015 are:

  • The information reporting requirements applicable to providers of minimum essential coverage, including self-insuring employers, under Section 6055 of the Internal Revenue Code.
  • The information reporting requirements applicable to large employers (employers employing 50 or more full-time or full-time equivalent employees) relating to the health coverage the employer offers (or does not offer) to its full-time (30 or more hours per week) employees under Section 6056 of the Internal Revenue Code.

The guidance is clear that proposed rules regarding these reporting requirements are expected to be issued this summer. Voluntary compliance in 2014 is encouraged after proposed rules are issued to prepare for mandatory reporting in 2015, but no penalties will be assessed for non-reporting in 2014.

The employer penalties under the “play or pay” or “employer shared responsibility” rule applicable to large employers cannot be enforced until 2015, because the delay in the mandatory reporting requirements will result in incomplete information that is necessary to calculate the penalties.

EMPLOYER ACTION ITEMS

  • Employers still need to identify full-time employees by tracking hours. An employee will need to know whether or not he or she is a full-time employee as defined for purposes of health care reform for purposes of the premium tax credits (subsidies) for coverage under an exchange.
  • Employers still need to distribute the mandatory public health insurance exchange notice by October 1, 2013. While the employer information included in the model notice is optional, employers should consider providing information about the employer’s group health plan (if any) to cut down on employee requests for the information the employee will need to apply for a premium tax credit (subsidy) for coverage under an exchange.
  • The public health exchanges will rely on individuals reporting whether or not their employers offer them minimum essential coverage that is affordable and has minimum value. Employers should still (but are not required to) determine whether coverage is affordable and has minimum value so that full-time employees have that information if they choose to apply for coverage through the public health exchanges. Employers could be contacted by the exchanges to verify employee-provided information.
  • Employers that sponsor a self-insured health plan with a plan year ending on or after September 30, 2012 and before January 1, 2013, must file a Form 720 and pay fees based on the average number of lives covered under the plan to help fund the Patient-Centered Outcomes Research Trust Fund. These employers must report and pay these fees on or before July 31, 2013.
  • Employers that sponsor a self-insured health plan still must report the average number of lives covered under the plan to the Department of Health and Human Services (HHS) no later than November 15, 2013, and pay HHS all required reinsurance fees within 30 days of receiving the total amount due from HHS.
  • Employers still need to comply with any plan design changes that are required in 2014 that likely will require plan amendments and SPD updates, including:
    • Waiting periods prior to eligibility for health coverage may not exceed the date 90 days from an employee’s date of hire.
    • Pre-existing condition exclusions will NOT be allowed.
    • Cost-sharing is capped and no annual or lifetime limits on benefits will be allowed.
    • Coverage of adult children to age 26 is required (even if the adult child has other coverage available).

Please contact Dannae Delano with any questions you have about the transition guidance or regarding what you need to do for 2014.


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