On July 2, 2013, the Obama Administration announced a one-year delay, until January 1, 2015, of the “Employer Mandate,” one of the central requirements of the Patient Protection and Affordable Care Act (“ACA”). The mandate—the requirement that employers of 50 or more workers provide their full-time workers with the option to enroll in affordable, quality health care coverage or face a monetary penalty—was expected to take effect in 2014. In announcing the one-year reprieve, the Administration explained that it was responding to employers and business groups who expressed concern about the complex employer and insurer reporting requirements under the ACA. The government will use the additional time to consider ways to simplify the reporting rules consistent with the law, and encouraged employers to continue to adapt to the new health coverage and reporting system obligations.

Reporting Rules

ACA § 6055 requires informational reporting by insurers, self-insuring employers, and other parties that provide health coverage. Section 6056 imposes reporting obligations on employers with respect to the health coverage offered to their full-time employees. The level of required detail is significant as employers must report:

  • The number of full-time employees for each month of the calendar year;
  • The name, address, and taxpayer identification number (TIN) of each full-time employee and the months (if any) during which the full-time employee (or any dependents) were covered under the eligible employer-sponsored plan; and
  • For employers who provide their full-time employees the opportunity to enroll in minimum essential coverage:
    • The duration of any associated waiting period;
    • The months during the calendar year when coverage under the plan was available;
    • The monthly premium for the lowest cost option in each enrollment category under the plan; and
    • The employer’s share of the total allowed costs of benefits provided under the plan.

Notice 2012-33, 2012-20 I.R.B. 912 (May 14, 2012).1

Acknowledging the burden of reporting, the July 2 announcement issued by the White House, stated in part:

We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination. So we plan to re-vamp and simplify the reporting process. Some of this detailed reporting may be unnecessary for businesses that more than meet the minimum standards in the law. We will convene employers, insurers, and experts to propose a smarter system and, in the interim, suspend reporting for 2014.2

Impact of the Delay  

  1. Provides relief for both employers—especially small businesses—and for employees concerned that their jobs or hours were at risk. Some companies threatened layoffs or job realignments to keep their workforce under the 30-hours-per-week threshold for “full time” status and thereby avoid the penalties of the insurance mandate.
  2. Allows both the Administration and business community time to explore ways to simplify the reporting process and reduce the financial and regulatory burdens of the employer mandate.
  3. Raises concern that, by delaying the mandate and its reporting requirements for businesses, the individual mandate may also be at risk. The employer-reported data was an important element of the government’s ability to confirm individuals’ eligibility for premium subsidies when seeking coverage on the state-based insurance exchanges.

Open Questions and Next Steps

  • Will the delay of the Employer Mandate jeopardize or serve to expand the scope of the Exchanges? Without mandated employer coverage, some commentators speculate the states will enjoy an increase in enrollment by individuals in the Exchanges. Open enrollment is scheduled to begin October 1, 2013 with insurance coverage taking effect January 1, 2014.
  • In the coming weeks, the Treasury Department expects to issue proposed rules implementing revised and potentially streamlined reporting requirements for employers and insurers.
  • Expect renewed interest in the “Forty Hours Is Full Time Act of 2013” (S. 701), a bipartisan measure introduced in Congress in April 2013 to amend the IRS Code of 1986 to modify the definition of “full-time employee” for purposes of the employer mandate in the ACA.

Employers are reminded that only the “mandate” portion of the ACA is delayed. Other provisions of the ACA affecting the workplace remain in force, including regulations affecting wellness programs, essential benefits, and maximum 90-day waiting periods before granting coverage.