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Surprise! Surprise! – Delay in Enforcement of Employer Mandate under Affordable Care Act

Posted in Benefits

In a surprise announcement on Tuesday, July 2nd, the Obama administration stated that it will delay for one year the enforcement of the penalty that was set to be imposed against large employers who failed to provide adequate health coverage to their full-time employees starting in 2014.  The delay is due in large part to the inability of the Internal Revenue Service to timely establish the applicable reporting requirements (also intended to be effective beginning with respect to the 2014 calendar year) that would have provided the necessary information to determine whether such penalty was applicable.  This is welcomed news for many employers who are currently getting prepared for their 2014 open enrollment seasons.

The announcement did not indicate that otherwise applicable mandates, such as the prohibition on annual limits and preexisting condition exclusions, would be delayed.  Accordingly, employers who offer health coverage (whether insured or self-insured) will still be required to comply with applicable market reforms with respect to such coverage.  Similarly, there is no indication that the delay will apply to the individual mandate, which requires that individuals obtain health coverage or face a penalty.  The agencies have indicated that guidance will be issued within the next week to address this transition period through 2014, and additional information will be posted as such guidance is released.