IRS Issues Guidance Regarding Delay of Employer Shared Responsibility Payments

On July 2, 2013, the Obama administration announced that the reporting requirements which are integral to the assessment of Employer Shared Responsibility Payments associated with the Patient Protection and Affordable Care Act’s (PPACA) Employer Mandate will be delayed until 2015. The Internal Revenue Service (IRS) has published IRS Notice 2013-45 which provides formal guidance regarding this delay.

IRS Notice 2013-45 (Notice) provides transition relief for 2014 from:

1. certain information reporting requirements that are applicable to insurers, self-insuring employers and certain other providers of minimum essential coverage; and
2. the information reporting requirements that call for a large employer to provide information about the health coverage that it offers (or does not offer) to its full-time employees.

The IRS intends to use the health coverage information that will be reported by a large employer to determine whether that employer is liable for a Shared Responsibility Payment if a full-time employee obtains health coverage from the health insurance marketplace and qualifies for financial assistance. Since a large employer is not required to provide such health coverage information until 2015, it will be impractical for the IRS to determine which large employers owe Shared Responsibility Payments for 2014. As a result, no Shared Responsibility Payments will be assessed for a large employer’s failure to offer affordable, minimum value coverage to its full-time employees and their dependents during 2014.

The Notice does encourage large employers and other affected entities to maintain or expand health coverage and to voluntarily comply with the information reporting requirements (once rules have been issued) during 2014 in preparation for the 2015 effective date. Rules related to the reporting requirements are expected to be published this summer.

This transition relief provides large employers additional time to update their health coverage options and to provide additional input with regard to simplifying the information reporting requirements. The transition relief does not delay the effective date or the application of other PPACA provisions, including the individual mandate which becomes effective on January 1, 2014.

Please contact your PPACA specialist if you have any questions regarding this recent guidance.