On Tuesday, July 2, 2013, the Obama Administration announced a one-year delay in applications of penalties associated with the employer shared responsibility requirements established under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, and the Health Care and Education Reconciliation Act, Pub. L. No. 111-152 (collectively, the ACA). As a result, applicable large employers will not be subject to a penalty if any of their full-time employees (and their dependents) receive a tax credit to obtain health insurance through an Affordable Insurance Exchange (or Marketplace) in 2014.
In a blog entry posted on the U.S. Department of the Treasury website, Assistant Secretary for Tax Policy Mark Mazur announced that the administration “will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin.”1 Specifically, reporting requirements established under new Internal Revenue Code (IRC) Sections 6055 and 6056 will be delayed until 2015, in part, due to the fact that proposed rules implementing these provisions have not yet been released. The blog indicates that the administration intends to publish proposed rules regarding these provisions “this summer.”2 As a result of this delay, the Administration announced its intention to also suspend application of the employer shared responsibility penalties for 2014.
On July 9, 2013, the Internal Revenue Service (IRS) released Notice 2013-45, Transition Relief for 2014 Under §§ 6055 (§ 6055 Information Reporting), 6056 (§ 6056 Information Reporting) and 4980H (Employer Shared Responsibility Provisions).3 This guidance confirms the Administration’s earlier statements that reporting requirements under IRC §§ 6055 and 6056 will be subject to transition relief for 2014. During this time, employers, insurers, and other reporting entities will not be subject to a penalty for failing to comply with the provisions of IRC §§ 6055 and 6056. The guidance further clarifies that because these reporting requirements are “integral to the administration of the Employer Shared Responsibility Provisions,”4 and because the transition relief made available under the guidance with respect to these reporting requirements “is expected to make it impractical to determine which employers owe shared responsibility payments for 2014,”5 the guidance simultaneously provides that “no employer shared responsibility payments will be assessed for 2014.”6 In other words, employers will not be subject to a penalty for failing to offer affordable, minimum value coverage to their full-time employees (and their dependents) in 2014.
IRS Notice 2013-45 encourages employers and other affected entities to both voluntarily comply with the information reporting requirements, pending the issuance of regulations, and maintain or expand health coverage in 2014. The guidance also states expressly that the transition relief provided by the IRS “has no effect on the effective date or application of other Affordable Care Act provisions, such as the premium tax credit under § 36B and the individual shared responsibility provisions under § 5000A.”7 As such, the transition relief provided for by the IRS through this guidance is narrowly tailored to the IRC §§ 6055 and 6056 reporting requirements and application of penalties, and is limited to 2014.