ACA Updates: Among Shifting Deadlines, Employer Penalty and Exchange Notices Delayed

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This article was written for publication in the July, 2013 issue of the New Hampshire Employment Law Letter, a newsletter written for New Hampshire employers by the labor and employment attorneys at Sulloway & Hollis and published by BLR® – Business & Legal Resources.

Multiple Patient Protection and Affordable Care Act deadlines looming for employers at the end of this summer or the beginning of next year have been pushed back as federal agencies scramble to issue rules to implement various aspects of the Act. Although employers will have more time to comply with numerous requirements, they should stay up-to-date regarding the various requirements and prepare to comply with any given deadline in the timeframe set at the moment, despite what appears to be a trend of delay.

Delayed Deadlines

Employer/Insurer Reporting Requirements: In a July 2 blog posting, U.S. Treasury Department Assistant Secretary for Tax Policy Mark J. Mazur stated that the Obama Administration would not be enforcing the ACA mandatory employer and insurer reporting requirements, and thus the employer penalty, until 2015.

Acting on feedback from businesses that criticized the employer and insurer reporting requirements, Mazur wrote that the Department would “consider ways to simplify the new reporting requirements.”

The delay also provides the Administration additional time to address concerns that the employer penalty will prompt employers to cut the number of employees eligible for coverage instead of expanding coverage generally, particularly if it is difficult for employers to comply with the law’s reporting requirements. In what appears to be a veiled reference to that issue, Mazur wrote the extension “will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”

Across many media outlets, the Administration’s decision to delay the employer mandate has been cited as undermining confidence in its ability to effectively and timely implement the ACA in general.

Insurance Exchange Notices: The ACA requires employers to provide employees with notice regarding the state or federal insurance exchanges expected, at the moment, to go live in October for open enrollment, with coverage to begin January 1. Originally scheduled to be issued in March, the deadline was moved back to October 1, 2013, shortly before the March deadline would have elapsed. The DOL has provided a model notice that may be used by employers who wish to issue the notice to employees prior to the October 1 deadline. However, final regulations have yet to be issued to govern the contents of notices issued to current employees and new hires on and after that deadline.

The model notice and additional guidance are available at http://www.dol.gov/ebsa/newsroom/tr13-02.html. The guidance also includes an updated model election notice for group health plans to use for purposes of the continuation coverage options under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), to include information on coverage alternatives offered through the state or federal insurance exchanges.

Final rules regarding the exchange notices are expected later this summer.

Small Business Insurance Marketplaces: Originally scheduled to go live on January 1, 2014, exchanges with federal involvement, as in New Hampshire, will not offer Small Business Health Options Program (SHOP) coverage until at least 2015. The SHOP exchanges were to be open to employers with 100 or fewer employees (with an optional 50 employee threshold) to allow the employer to purchase insurance for its employees through an ACA exchange. A tax credit was also to be available to some small employers participating in SHOP exchanges. Federal exchanges anticipate an initial offering of one plan through the SHOP exchange.

Some Items Still On Track

Although several of the law’s key provisions have been delayed thus far, many have already taken effect, and a few are on the horizon with no expectation they’ll be moved back at this point. Notably, the individual mandate and insurance exchanges for individual coverage will take effect January 1, 2014, and the Patient-Centered Outcomes Research Institute (PCORI) fee payments are due beginning July 31, 2013.

The PCORI fee, which is assessed on issuers of certain health insurance policies and plan sponsors of self-insured health plans (including health reimbursement arrangements and health flexible spending arrangements), applies to plan years beginning September 30, 2012, and expires October 1, 2019. Employers should be aware that, even if the issuer of a health insurance policy pays the PCORI fee for employees covered by a health insurance plan, the Internal Revenue Service states that the employer will generally have to pay a separate PCORI fee if it provides a self-funded HRA. Some relief may be available from this “double counting” under certain circumstances. Plan sponsors subject to the tax will report and pay the fee on Form 720, Quarterly Federal Excise Tax Return. The IRS PCORI Q & A is available at http://www.irs.gov/uac/Patient-Centered-Outcomes-Research-Trust-Fund-Fee:-Questions-and-Answers.

Bottom Line

In the shifting sands of ACA deadlines, employers need to be aware of the myriad requirements and responsibilities of the law at any given moment, or risk spending time and money implementing various provisions earlier or later than necessary. Employers should consider in the analysis of their plans to implement the various aspects of the law both the likelihood and impact of a potential deadline delay on their business, and the consequences of late or early implementation of each requirement.

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