The Internal Revenue Service announced late on Tuesday, July 2nd that the employer “pay or play” mandate will be delayed until 2015. The announcement comes after many businesses complained that the requirements of the mandate were too complicated and would be too difficult to implement by 2014. “We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” wrote Mark Mazur, assistant Treasury secretary for tax policy, in an IRS blog.
The employer play or pay mandate, or the “employer shared responsibility” mandate, generally imposes a two-tiered obligation on employers with 50 or more full-time equivalent employees. First, the law requires these employers to choose whether to offer at least bare-bones coverage to 95 percent or more of the employer’s full-time employees and their children or pay a nondeductible $2,000 annual penalty for each full-time employee (minus the first 30 full-time employees). Employers who choose to “play” rather than “pay” are then obligated to enhance the coverage offering, at least to full-time employees. The offering must satisfy a minimum 60 percent actuarial value standard and an “affordability” standard or the full-time employee would generally be free to shop for coverage in a public health insurance exchange. For each full-time employee who enrolls in coverage through an exchange and receives federal subsidies to defray the cost of coverage, the employer would owe a $3,000 nondeductible penalty per year.
The delay does not affect other key parts of the law. For example, health exchanges and individual mandates are still set to take effect on January 1, 2014.
For questions regarding this, please contact a member of the Underwood Law Firm, P.C.’s Employment Law Section.
This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.