• ACA "Pay or Play" Penalties Delayed Until 2015
  • July 4, 2013 | Authors: Tiffany D. Downs; Isabella P. Lee; Scott V. Wagner
  • Law Firm: Ford & Harrison LLP - Atlanta Office
  • Executive Summary: The Obama Administration has announced that implementation of the penalties under the Affordable Care Act's ("ACA") employer mandate (also known as the "pay or play" penalties) have been delayed until 2015.

    Practical Impact:

    • The ACA requires employers and insurers to report to the Internal Revenue Service via Forms 6055 and 6056 certain information about the health care provided to employees. Reporting was supposed to start in 2014, but no formal guidance has yet been issued.
    • The Treasury Department said in a statement that "[o]nce these rules have been issued, the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015."
    • The Obama Administration noted that this reporting transition relief will make it "impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014." Accordingly, transition relief is being provided to the employer mandate penalties. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.
    • Formal guidance describing this transition is expected later this week.

    The Bottom Line: Transition relief is being provided for the employer mandate penalties and reporting on Forms 6055 and 6056 only.

    However, employers will still have to comply with the other portions of the ACA, including reporting requirements such as Form W-2 Reporting; health plan coverage and design mandates, such as women's preventive care, pre-existing condition exclusions, and implementing a 90-day waiting period; and distribution requirements such as distributing a Summary of Benefits and Coverage and Notice of Coverage Options.

    This transition relief also does not affect the implementation of the Health Insurance Exchanges, and the SHOP portion of the exchanges remains delayed.