By now practically everyone knows that the Administration is not implementing the health reform employer mandate until 2015. This alert is to let our friends and clients know what has changed, and what has not changed as a result of the delay in the employer mandate. We will know more when the IRS publishes formal guidance on the delay later this week and will provide a further update then if necessary.
What has Changed As a Result of the Delay in the Employer Mandate
The delay in the employer mandate is welcome relief and provides some breathing room but don’t be lulled into inaction – a number of options and alternatives for dealing with the new federal mandates won't be available after January 1, 2014. The main implications of the delay for employer plans:
- Employers will not incur an employer mandate penalty in 2014 for failing to offer health coverage that meets the “Minimum Essential Coverage” “Minimum Value” and “Affordability” requirements under the Affordable Care Act to all of their “full-time” employees. If you have already entered into a contract with an insurer or third party claims administrator for coverage in 2014, you may want to see whether you can modify that contract based on the changed circumstances.
- Employers will have more time (in most cases until the start of their open enrollment period in 2014) to designate their Initial Measurement Period, Standard Measurement Period and Stability Periods for coverage in 2015. However, some employers may be better off designating those periods before the start of their open enrollment period in 2013, depending on how the Administration implements the delay in the employer mandate. Consciously designating these periods is particularly important for employers that have temporary, seasonal, part-time, or variable hour employees to whom they do not offer coverage.
- Employers will not need to file Forms 6055 (reporting full-time employee coverage) and 6056 (reporting minimum essential coverage offered to individuals) for 2014, but will need to do so for coverage provided in 2015. The IRS has not released these forms yet or the procedures for filing them.
What has Not Changed
A number of compliance issues affecting employer health plans are not affected by the delay in the employer mandate, including:
- Employers still need to enhance the coverage they offer in 2014 to comply with the enhanced substantive coverage requirements of the Affordable Care Act (such as elimination of preexisting conditions, elimination of annual limits, cost sharing and deductible limits).
- Employers still need to distribute the Notice of Availability of Coverage Through the Health Insurance Exchange by October 1, 2013.
- Self-funded plans still need to pay the PCOR fees, beginning in July 2013.
- The third party administrator (of self-insured plans) and the insurer (for fully insured plans) still need to pay the transitional reinsurance payments at the end of 2013.
- Employers still need to review and update their Business Associate Agreements, HIPAA Privacy and Security policies, Notice of Privacy Practices, and HIPAA Breach Notification procedures by September 2013 to ensure compliance with the updated HIPAA regulations for HITECH and GINA.
- Employers that issued at least 250 W-2s in 2012 are still required to report the value of employer-provided health insurance coverage on W-2s issued for 2013.
- The final wellness plan rules are still going into effect as of 2014.