On July 2, the Obama Administration announced that implementation of the reporting and penalty provisions of the Affordable Care Act (“ACA”) for employers of 50 or more employees will be delayed until 2015. According to a Treasury Department memorandum, the delay is due to concerns raised about the complexity of the reporting requirements and the need for more time to implement them effectively. Therefore, applicable large employers, i.e., those who employ 50 or more full-time or full-time equivalent employees, will not be required to provide health care insurance to all employees who work 30 or more hours per week starting in 2014. Instead, the penalty provisions will take effect in 2015.

The stated purpose of the delay is to: (1) allow the government to try to simplify the new reporting requirements; and (2) provide employers time to adapt health coverage and reporting systems to meet the requirements of the law. Formal guidance describing this transition is expected within the next week. The ACA requirements include information reporting by insurers, self-insuring employers, and other parties who provide health coverage, as well as information reporting by certain employers with respect to the health coverage offered to their full-time employees. The Treasury Department states that it expects to publish proposed rules implementing these information reporting provisions this summer. 

Because the delay in the reporting requirements would make it impractical to determine which employers owe shared responsibility payments for 2014 (i.e., the $2,000 per employee penalty), the government has decided to extend this transition relief to the employer shared responsibility payments. Consequently, no penalties will apply for 2014 and, in effect, the requirement to provide health insurance coverage to all full-time employees or face a penalty tax will not apply until 2015.

According to the memorandum, this delay does not affect employees’ access to the premium tax credits available under the ACA or implementation of the state health insurance exchanges.