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Employer Responsibility Requirement Delayed Until 2015

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July 23, 2013

The Internal Revenue Service (IRS) has issued a notice that the Employer Responsibility Requirement, a key part of Affordable Care Act (Health Care Reform) originally set to being in 2014, is being delayed 1 year.   The new effective date is January 1, 2015. This affects 2 provisions under Health Care Reform: (1) the penalty for larger employers (those with 50 or more employees) that do not provide coverage for their workers, and (2) reporting requirements for employers and insurers.

The reason for the delay is due to complexity in implementing the reporting requirement, and according to the IRS, is “intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health care coverage and reporting systems.”   This part of the law requires employers to file a “return” with the Secretary of Treasury, reporting information on the health coverage provided to employees. The IRS relies on these reports to determine which large employers need to pay the employer responsibility fine. This fine is imposed when employers don’t provide minimum essential and affordable health care coverage. Without reports, the employer responsibility requirement cannot be implemented in 2014, as originally planned.

The IRS is hoping this delay will allow time to simplify the reporting requirements. In the IRS notice, it is stated that no employer shared responsibility penalties will be issued in 2014; also, no penalties will be assessed for failure to comply with reporting provisions.

Although an IRS notice has been issued, the specific rules implementing these provisions are expected sometime this summer.  The government is strongly encouraging employers to voluntarily comply with the reporting requirement. They are hoping this will help make for a smoother transition in 2015.

These changes do not affect an employee’s access to financial assistance (premium tax credits or cost-share subsidies) or any other provision under the Affordable Care Act. 

For more information, please read this note posted on the U.S. Department of Treasury website, or go to our website at Health Care Reform.