Large Employer Penalty Delayed for One Year

The U.S. Treasury Department has announced that it will delay enforcement of the “pay or play” requirements for one year. As a result, any penalties (also known as employer shared responsibility payments) will not apply until 2015. The requirements were originally to become effective on January 1, 2014.

According to the announcement, the law requires that certain information be reported by insurers, self-insuring employers, and other parties that provide health coverage. It also requires information reporting by certain employers with respect to the health coverage offered to their full-time employees. In order to ensure a smooth transition and allow for real-world testing of reporting systems, the agency is providing transition relief with respect to these reporting requirements which will make it impractical to determine which employers owe shared responsibility payments for 2014.

Accordingly, the transition relief is being extended to the “pay or play” penalties and any such penalties will not apply until 2015. Employer shared responsibility payments will not apply for 2014. The agency encourages employers to maintain or expand their health coverage during the 2014 transition period.

The PCORI tax, the tax on plans to fund a temporary reinsurance program, the 90-day limitation on waiting periods, the prohibition on preexisting condition exclusions, the Exchange Notice, as well as other health insurance reforms have NOT been given a one-year delay in this announcement. The individual mandate was not delayed.

Formal agency guidance is expected to be published in the near future describing this transition relief.