Affordable Care Act: Implementation of Reporting Requirements and Penalties Delayed One Year

Employee Benefits Alert

Client Alert

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The Department of Treasury announced on July 2 that it will provide transition relief of one additional year for the mandatory employer and insurer reporting requirements under the Patient Protection and Affordable Care Act (“ACA”). As a related matter, Treasury announced that the transition relief will extend to the “shared responsibility payments” under ACA, which are sometimes referred to as the “play-or-pay penalties.”

The requirements under ACA covered by the transition relief are as follows:

  • Insurers, self-insuring employers, and certain other parties are required to file a return with the Internal Revenue Service (“IRS”) regarding the provision of “minimum essential coverage” and to provide a related statement to covered individuals.
  • Applicable large employers (generally, those with 50 or more full-time employees) are also required to file a return with the IRS regarding the coverage provided to employees and to provide a related statement to such employees.
  • Applicable large employers that do not offer the required coverage or offer the required coverage but have employees certified as eligible for premium tax credits or cost-sharing reductions are generally subject to penalties.

Without the transition relief, the foregoing requirements would have applied beginning January 1, 2014. With the transition relief, insurers and employers will not be required to file and provide the new returns for 2014, and employers will not be penalized for not meeting the requirements necessary to avoid the shared responsibility payments. Treasury has indicated that it will encourage voluntary implementation of the reporting requirements in preparation for application of the requirements in 2015, but it remains to be seen how the requirements will be voluntarily implemented.

Treasury noted that its actions do not affect any other provisions of ACA including premium tax credits. Such other provisions presumably include the individual mandate and the related penalties. However, it is not clear how certain premium tax credits would be determined in the absence of information reporting from employers. Formal guidance describing the transition relief is expected within the next week.

If you have any questions about the guidance or any other employee benefits matters, please contact one of the attorneys in the Employee Benefits & Executive Compensation Group at Bradley Arant Boult Cummings LLP.