Health Care Reform: Where are We Now that ACA’s Employer Mandate Has Been Delayed for One Year?

The Benefits world was rocked last week when it was announced that enforcement of the ACA employer shared responsibility penalties would be delayed for one-year. IRS Notice 2013-45, released late yesterday, July 9, officially confirmed the delay, but provided no real additional guidance.  Employers are asking, what exactly this means?  Read on for our summary of where things stand.

I.     What ACA requirements are delayed in 2014?

• Employer Mandate:  Employers must offer coverage to employees who work on average 30+ hours per week.
• Affordability:  Coverage must be affordable (i.e., the employee’s share of the coverage cost cannot exceed 9.5% of the employee’s household income).
• Minimum Value:  Coverage must provide minimum value (although this requirement is waived, employer must still report whether a plan provides minimum value on the SBC).
• Certain Reporting Requirements:  Employers (and insurers) must provide information regarding employees and coverage in order to facilitate enforcement of the employer mandate.

II.    What ACA requirements remain effective in 2014 for employers?

• SBC:  Summaries of Benefits and Coverage must be distributed during open enrollment for the 2014 coverage period and must indicate whether the plan provides minimum value.
• Exchange Notices:  Employers must distribute exchange notices to employees by October 1, 2013, and thereafter to new employees upon hire.
• Application for Advance Premium Credits:  Employers are required to complete a 12 page form entitled, “Application for Health Coverage and Help Paying Costs” when requested by employees who are  applying for advance premium tax credits when purchasing coverage on the market..
• ACA Fees:  Patient-Centered Outcome Research Institute Fees (“PCORI Fees”) must be paid in July 2013.  The first Transitional Reinsurance Fee must be paid on or before January 15, 2015.
• W-2 Reporting:  Employers must continue to report the aggregate value of health coverage on Forms W-2.
• Counting Period for Employer Mandate: Employers that need to determine whether they will be subject to the employer mandate in 2015 (50 or more full-time or full-time equivalent employees in 2014) will need to record employee hours in 2014.  It is not yet clear whether a short counting period will be available which means that employers may wish to track hours on a per-employee, monthly basis beginning January 1, 2014.
• Measurement Period for Employer Mandate:  Employers will need to count employees and record hours over the applicable measurement period to determine which employees are eligible for coverage offers effective January 1, 2015, under the employer mandate.  Presumably the transitional measurement period will no longer be available which means employers may want to count hours over a 12-month Standard Measurement Period commencing November 1, 2013.  This would afford employers a two-month administrative period at the end of 2014 in which to evaluate eligibility data and extend coverage offers to eligible employees.
• Benefit Mandates For All Plans:  Plan design requirements for all plans continue to apply (e.g., maximum 90-day waiting period, no limits on pre-existing conditions or essential health benefits, expansion of wellness incentives, dependent coverage to age 26).
• Benefit Mandates for Non-Grandfathered Plans Only:  Plan design requirements for non-grandfathered plans only continue to apply (e.g., preventive care coverage requirements, limits on out-of-pocket maximums, coverage for clinical trial-related services, and provider nondiscrimination, and for small group health plans, limits on annual deductibles).

III.   What ACA requirements for individuals remain effective in 2014?

• Individual Mandate:  Individuals must have health care coverage or pay a penalty.
• Exchanges:  Public exchanges are still scheduled to offer coverage effective January 1, 2014.
• Subsidies:  Premium subsidies will be available to help eligible individuals buy policies on the exchange.

The additional time afforded by the delay should be a welcome reprieve for employers – as well as an opportunity to more thoroughly evaluate various compliance strategies and their relative costs and administrative burdens.  The delay will also afford employers more time to implement and communicate their selected health care reform compliance strategies.