IRS Releases Additional Guidance on Delay of PPACA Play or Pay Penalties and Employer Reporting Requirements
As reported in a previous SGR Client Alert, last week, the Obama Administration announced that it will provide an additional year - until 2015 - for employers to begin complying with the mandatory reporting obligations under the Patient Protection and Affordable Care Act ("PPACA"). In addition, the Obama Administration announced that it is postponing enforcement of the play or pay penalties under PPACA until 2015.
On July 9, the Internal Revenue Service (the "IRS") released Notice 2013-45 which provides transition relief for 2014 from the following requirements under PPACA:
- The information reporting requirements applicable to insurers, self-insuring employers, and certain other providers regarding minimum essential coverage under Section 6055 of the Internal Revenue Code of 1986, as amended (the "Code");
- The information reporting requirements applicable to large employers - generally, employers with at least 50 employees - under Code Section 6056; and
- The employer shared responsibility provisions under Code Section 4980H (the "play or pay" provisions).
Important highlights from Notice 2013-45 include the following:
- The transition relief provided in Notice 2013-45 does not impact the effective date or application of other PPACA provisions. Therefore, employers must still continue to comply with other applicable PPACA requirements (e.g., the requirements to provide employees with Marketplace Notices and Summaries of Benefits and Coverage ("SBCs")). In addition, the transition relief has no impact on the premium tax credit and individual shared responsibility provisions under PPACA.
- Proposed rules regarding the information reporting provisions are expected to be published this summer. Once this guidance is released, the IRS is encouraging employers to voluntarily comply with the information reporting provisions and to maintain or expand health coverage in 2014. However, please note that such compliance is not required for 2014 and the IRS may not penalize employers that do not comply.
- According to the IRS, the transition relief is intended to provide more time for input from employers and other reporting entities to simplify information reporting under PPACA. The transition relief also is intended to provide employers, insurers, and other affected entities additional time to adapt their health coverage and reporting systems.
Despite the transition relief, it appears that employers may need to perform the analysis to determine whether their group health plans meet the "minimum value" requirements under PPACA for the 2014 plan year (i.e., whether their group health plans meet the 60% actuarial value standard). As stated in a previous SGR Client Alert, this information is required to be included in SBCs provided in connection with coverage beginning on or after January 1, 2014 (i.e., SBCs provided during the 2013 open enrollment season).
For more information, please contact your SGR Executive Compensation and Employee Benefits Counsel.