Through a blog post on July 2, 2013, the U.S. Treasury announced that it was delaying until 2015 two key pieces of the Affordable Care Act that directly impact employers: (1) the health care reporting requirements under Code Sections 6055 and 6056 and (2) the penalties imposed pursuant to the employer shared responsibility requirements under Code Section 4980H (commonly referred to as the Employer Mandate). Link to the U.S. Treasury blog post can be found here. A link to the White House’s website can be found here. Treasury is expected to issue formal guidance about the delay of ACA provisions this week.

By way of background, Code Section 6055 requires health insurance issuers, sponsors of self-funded plans and other entities offering health care coverage to file annual returns and furnish a written statement to covered individuals about the coverage being provided. Code Section 6056 also requires employers to report certain information about the health care coverage being offered to their full-time employees. The Employer Mandate requires an applicable large employer (i.e. an employer with 50 or more full-time or full-time equivalent employees) to offer minimum essential health care coverage to its full-time employees that is both affordable and provides minimum value to avoid the penalties under Code Section 4980H. An applicable large employer could suffer penalties under the Employer Mandate if one of its full-time employees (currently defined as an employee working an average of 30 or more hours a week) receives a government-subsidized health insurance policy from the Health Insurance Marketplace and (1) the applicable large employer fails to offer substantially all of its full-time employees (i.e. 95% or more) and their dependent-children the opportunity to enroll in minimum essential coverage (this is the annual penalty of $2,000 multiplied by the number of all full-time employees reduced by 30); or (2) the applicable large employer offers substantially all of its full-time employees and their dependent-children the opportunity to enroll in minimum essential coverage, but that coverage excludes a full-time employee, is unaffordable or does not provide minimum value (this is the annual penalty of $3,000 multiplied by the number of full-time employees that receive government-subsidized health insurance policy from the Marketplace).

The unexpected move by Treasury to delay the application of penalties under the Employer Mandate is welcome relief to employers. First, Congress could succumb to lobbying pressures to shift the definition of full-time employee from a 30 to 40-hour standard. Even if such legislation is not enacted, employers now have another year to analyze and minimize costly penalties under the Employer Mandate, including implementing plan design, workforce and administrative system changes. Treasury also indicated that it intends to simplify the employer reporting requirements under Code Section 6056 due to feedback from employers. Proposed regulations for the new employer reporting requirements under Code Section 6056 are expected this summer and this delay will allow employers to implement the necessary systems to comply with these new reporting requirements.

It is important to note that the delay in the ACA health care reporting and the Employer Mandate does not delay the implementation of any of the other ACA provisions, including:

  • The Health Insurance Marketplace is still targeted to be operational for October 1, 2013 enrollment, allowing individuals and small businesses to purchase health insurance.
  • Individuals without required health insurance coverage will be subject to additional income taxes beginning January 1, 2014.
  • Employers must distribute the “New Health Insurance Marketplace Coverage Options and Your Health Coverage” notice, which must be furnished to all existing employees by October 1, 2013, and for any newly hired employees after that date, within 14 days of their start date. Model notices are available at There are two model forms, one for employers with group health offerings and one for employers without group health offerings. Please note that the DOL could potentially modify the model Marketplace notice in reaction to the Employer Mandate delay.
  • The remaining ACA market reform provisions will take effect January 1, 2014, including:
    • Removal of pre-existing condition exclusions;
    • Removal of any transitional annual dollar limits on essential health benefits;
    • Removal of any provision under a grandfathered option which excluded coverage of an adult child who was eligible for other coverage;
    • Removal of excessive waiting periods;
    • Guaranteed access and renewability rights under insured policies; and
    • Fair Health Insurance Premium requirements in the small group markets.