On July 9, 2013, the Internal Revenue Service issued Notice 2013-45 ("Notice"), which provides for transition relief until 2015 from information reporting requirements under Internal Revenue Code ("IRC") sections 6055 and 6056. These sections require an employer to annually report to the IRS information regarding the health insurance that the employer offers (or does not offer) to its full-time employees. These reporting obligations will be used by the IRS to determine the assessable payments owed by employers under the employer shared responsibility rules (IRC sections 4980H(a) and 4980H(b))—more commonly known as the employer mandate, or the pay or play rules.
This transition relief extends beyond the information reporting requirements. The Notice states that the transition relief from IRC section 6056 "is expected to make it impractical to determine which employers owe shared responsibility payments for 2014….Accordingly, no employer shared responsibility payments will be assessed for 2014." This relief is for 2014 only. Absent further guidance or legislative action to the contrary, full implementation and compliance with these rules will be required for 2015 and beyond.
What does this mean? It means that an applicable large employer will not be subject to any penalties for failure to offer health coverage to its full-time employees and dependents for 2014. Nor is an applicable large employer required to report to the IRS on the health coverage status of any of its full-time employees. However, applicable large employers should be aware that if they intend to use the safe-harbor method for determining employees’ full-time status (generally averaging 30 hours per week), the measurement period will start as early as October of this year for a 12-month testing period.
While the Notice delays the reporting requirements under IRC sections 6055 and 6056 and the assessable payments under IRC sections 4980H(a) and 4980H(b) until 2015, it does not delay any other aspect of the Patient Protection and Affordable Care Act ("PPACA"). For example, the Notice does not delay the implementation of:
- The PCORI fees, the temporary reinsurance fees, and the health insurance fees
- Updating the summary of benefits and coverage to include a statement of whether the health plans provide minimum value
- Sending all employees notices about the public exchanges
- The 90-day excessive waiting period rules
- No denial of coverage based on a pre-existing condition for anyone
- The individual mandate
- Many, many more provisions!
The Notice states that the information reporting rules under IRC sections 6055 and 6056 will be issued this summer.