• ACA Employer Reporting Requirements and Shared Responsibility Penalties Postponed Amidst Implementation Concerns
  • July 5, 2013 | Author: Nicole M. Hanna
  • Law Firm: Dinsmore & Shohl LLP - Cincinnati Office
  • The Assistant Secretary for Tax Policy at the Department of Treasury (Treasury) released an announcement July 2nd indicating that the Obama Administration has decided to postpone the reporting requirements for employers in order to allow the Treasury more time to consider and simplify the requirements in a way that is consistent with the Affordable Care Act (ACA). Along with this pronouncement, the Administration has decided to delay until 2015 the imposition of employer “shared responsibility” payments under Code section 4980H.

    The ACA includes two main reporting requirements: section 6055 (reporting by providers of health coverage, including self-insured employers) and section 6056 (reporting by employers with respect to the coverage offered to full-time employees). Treasury indicated that concerns over the amount and complexity of these reporting requirements made it necessary to delay their implementation until 2015.

    The Administration has also delayed the implementation of the employer shared responsibility payment under Code section 4980H stating that it would be “impractical to determine which employers owe [this payment] for 2014.” Without the necessary reporting, Treasury would be unable to determine if employers were subject to either, if any, penalty under section 4980H.

    This decision does not delay the “individual responsibility” payment under Code section 5000A, nor does the decision affect the availability of coverage on the health insurance exchanges. It appears (at least for now) that the exchanges will continue to move forward toward the goal of being operational at the beginning of 2014. However, large employers whose employees receive subsidized coverage on the exchange will not be penalized for the year 2014.

    Treasury also stated that the penalties will be fully applicable in 2015 and that regulations and guidance will be issued prior to this time regarding the simplification of the reporting requirements. Additionally, many employers have been considering limits on the size of their workforce and employee hours in order to avoid the 4980H penalties. This delay will allow employers more time to become familiar with the regulations. It also seems likely that the delay in implementation of the ACA employer shared responsibility obligations may have been precipitated by a desire to not trigger reductions in workforce hours or employee headcount in an election year.