Yesterday, the United States Treasury Department announced that the implementation of the Affordable Care Act’s employer shared responsibility requirements will be delayed until 2015. In general, these provisions (commonly referred to as the ‘pay or play” provisions) impose penalties upon applicable large employers (i.e., those with 50 or more full-time or full-time equivalent employees) if: (l) the employer does not offer “minimum essential coverage” to 95% of its full-time employees, the coverage offered is unaffordable or the coverage offered does not provide “minimum value;” and (2) a fuIl-time employee receives subsidized coverage for health insurance purchased on an exchange. The ‘pay or play” provisions also require an applicable large employer to submit detailed reports regarding the health insurance coverage provided to its full-time employees. The Treasury Department’s announcement does not impact an applicable large employer’s obligations with regard to healthcare exchanges, which are detailed below.

The employer shared responsibility provisions were to be effective January 1, 2014 or, for applicable large employers with healthcare plan years commencing on a date other than January 1, on the first date of the first plan year beginning in 2014. The provisions will now be effective in 2015.

The Treasury Department has advised that the additional year will permit the government to consider ways to simplify the reporting requirements and will allow time for an applicable large employer to modify the health insurance coverage provided to its employees. Within the next week, the Treasury Department anticipates issuing formal guidance regarding the extended transition of the employer shared responsibility requirements. It also expects to publish proposed rules over the summer. Once these rules are issued, the Treasury Department has advised that the Obama Administration will work with employers, insurers and other reporting entities to encourage them to voluntarily comply with the reporting requirements, even though there is no obligation to do so. This will provide a “test run” of the reporting systems before they officially go into effect.

Not all of the Affordable Care Act’s provisions have been delayed. As is relevant for applicable large employers, the Treasury Department’s announcement does not affect healthcare exchanges. An applicable large employer must still send, by October 1, 2013 for current employees and starting on October 1, 2013 for new employees, the notice of the availability of healthcare exchanges. We advised you of this obligation and provided you with a model notice form in our May 30, 2013 client memo.

In addition, full-time employees will remain eligible for subsidized coverage through the exchange. Thus, an applicable large employer will still need to determine whether the health insurance coverage provided to its full-time employees is affordable and/or provides minimum value.

We will continue to apprise you of any new developments. Please contact us if you have any questions with regard to the delayed implementation of the Affordable Care Act’s employer shared responsibility requirements.

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