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ACA Employer Penalties and Reporting Delayed Until 2015

Wednesday July 3rd 2013

In a startling announcement late Tuesday, July 02, 2013, the Obama Administration delayed the Affordable Care Act (ACA) information reporting requirements and penalties related to the employer mandate until 2015.

This is great news for applicable large employers. A White House statement summed up the rationale: “In our ongoing discussions with businesses we have heard that you need the time to get this right. We are listening.”

This transition relief means applicable large employers will not have to pay a shared responsibility penalty tax for 2014, either for failing to provide minimum essential coverage to substantially all full-time employees or failing to provide them coverage that is affordable and offers minimum value.

The reporting requirements apply to insurers and self-insured employers (under §6055 of the Internal Revenue Code) and to applicable large employers (under §6056 of the Code). Without this reporting, the IRS cannot effectively calculate the penalty tax. The Department of Treasury encouraged (but is not requiring) employers to maintain or expand health coverage during this one-year delay. Proposed regulations on information reporting are expected this summer.

This delay does not affect the October 1, 2013, start of the Health Insurance Marketplace or any of the other ACA mandates that take effect in 2014. Of course, the announcement does not rule out the possibility of other ACA-related delays.

What is your reaction to the delay? How does this affect your benefits strategy for 2014? Please comment below.

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