The Obama Administration has announced a one-year delay of the “shared responsibility payment” penalties and several of the employer information reporting requirements under the Affordable Care Act (“ACA”). Under the shared responsibility regime, employers with 50 or more full-time equivalent employees may be liable for significant tax penalties if any full-time employee purchases health insurance coverage from a state healthcare exchange, and uses a federal tax premium to do so.
The shared responsibility payment regime, reflected in section 4980H of the Internal Revenue Code, was originally effective January 1, 2014. Strategizing to avoid or minimize the amount of the payments is complex and time-consuming. The Administration’s announcement delays the effective date until January 1, 2015.
The shared responsibility payment regime is enforceable only with a significant sharing of information among employers, individuals, insurers, the state exchanges, the Internal Revenue Service (“IRS”), and the Department of Health and Human Services. The ACA’s reporting requirements are reflected in sections 6055 and 6056 of the Code. Section 6055 requires reporting to the IRS by any “person [including an insurer or self-insured employer] who provides minimum essential coverage to an individual.” Reports must include information identifying the individual, the dates the individual was covered, and the portion of the premium to be paid by the employer. Section 6056 requires reporting to the IRS by employers with 50 or more employees on information regarding the healthcare coverage it provides to its employees, the name and social security number of each full-time employee, and the dates of enrollment in the plan of each full-time employee.
The reporting requirements of sections 6055 and 6056 were originally scheduled to become effective January 1, 2014. The Administration’s announcement delays the effective date until January 1, 2015. Comprehensive regulations, which are sorely needed, are “expected” to be proposed this summer.
The delay does not affect any other ACA provision. In particular, the individual mandate and the premium tax credit will go into affect as originally scheduled.
The Administration’s announcement is set forth in IRS Notice 2013-45.