The employer mandate (the requirement that employers either "Play or Pay") in healthcare reform has been delayed until January 1, 2015. This means that employers will not be penalized in 2014 if they do not provide full-time employees (employees who average 30 or more hours) with affordable health insurance.
Healthcare reform required employers with more than 50 full-time employees to offer affordable health insurance to those employees starting in 2014. If not, the employer would face potential excise tax penalties if any of the full-time employees enroll on an exchange and obtain a tax credit (subsidy) from the government.
Penalties for employers not providing affordable health coverage to full-time employees will now begin on January 1, 2015.
While the postponement technically does not affect other central provisions of the law—in particular those establishing health insurance exchanges (known as marketplaces)—it may impact the government's effort to put many provisions into effect by January 1, 2014. Additional guidance is expected from the government soon.
What's NOT delayed as of this date?
Providing employees with an exchange notice and the healthcare reform fees are not (yet) delayed. Annual requirements such as distributing SBCs and reporting the total cost of health insurance on form W-2 are also not delayed. The government has also stated repeatedly that the exchanges will be on schedule to open in January 2014 (with open enrollment starting in October of 2013). Finally, healthcare reform's individual mandate remains in effect (which requires most Americans to have health insurance as of January 1, 2014 or pay a penalty).
The "Play or Pay" component of the law is the only item officially delayed. That means work hour-tracking (to determine who is a "full-time" employee) and the determination of whether you are offering an "affordable" plan, etc. is not a requirement for 2014.
What Should You Do Now?
Healthcare reform is still the law of the land and has many requirements that must continue to be followed. The employer mandate has been delayed, not repealed. This announcement (and the upcoming guidance) effectively means that penalties that could have been assessed against non-compliant businesses in 2014 will now be delayed until 2015. The government is still encouraging employers to provide insurance, but will not penalize employers for failing to do so.
The more practical result of this announcement is that employers now have more time to understand and seek clarification of the law, especially as it pertains to "Play or Pay."
We recommend employers use this additional time to digest the work hour-counting requirements and affordability rules.
The delay of the employer mandate, the most significant piece of healthcare reform effecting employers, raises questions about whether more elements of the law might be delayed in the coming months.
For now, Corporate Synergies recommends that employers continue to plan for the employer mandate (Play or Pay), and reconsider making any significant changes to comply with the mandate until further guidance is issued.
Among the questions employers will need to address by 2015:
- Is at least one of the health plans I am offering to full-time employees "affordable"?
- Do I have a way of tracking work hours for my variable-hour employees who may or may not work 30 or more hours on average (the look-back measurement test)?
- How should I communicate with and educate my employees to keep them informed about the changes in the law?
Corporate Synergies will continue to monitor the law and provide updates and guidance as it is necessary. For a more thorough understanding of healthcare reform, I encourage you to visit the Knowledge Center of our website (www.corpsyn.com) for a full listing of articles and alerts on this subject.
If you have any additional questions regarding the information within this eCommunication, please call Corporate Synergies at 1.866.CSG.1719 or CLICK HERE to contact us today.