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IRS Delays “Pay or Play” Mandate for Employers

It was announced yesterday (July 2nd) that under regulatory guidance to be issued next week, the “employer responsibility” mandate (commonly referred to as “Play or Pay”) under the Affordable Care Act will be delayed for one year.  For most employers with over 50 Full Time Equivalent employees, this means that no penalty will be charged employers for employees who obtain subsidized coverage through the public health insurance marketplace until 2015.

This announcement also means that the information return required to be filed by employers with the IRS to provide information about employer reported coverage is also delayed one year.

[As background information, under the ACA, if an employer does not offer a medical plan to at least 95% of their “full time” employees (and dependents) the employer may be subject to a $2,000.00 per “full time” employee penalty if any employee obtains subsidized coverage through the public health insurance marketplace.  (The $2,000.00 penalty is not charged on the first 30 “full time” employees.)

If the employer offers coverage that does not provide “minimum value” (i.e., the plan pays at least 60% of the cost of benefits provided) or is not affordable (i.e., the cost to the employee exceeds 9.5% of household income) the employer must pay a $3,000.00 penalty for each employee who elects out of employer coverage and obtains subsidized coverage through the public health insurance marketplace.  (Please note that employer contributions to an HRA, FSA, HSA or partially self-insured health plan count toward calculating the plan’s “minimum value”.)

If the employer offers coverage that provides “minimum value” and is “affordable” the employer is NOT subject to a penalty even if the employee obtains subsidized coverage through the public health insurance marketplace.]

If you have any questions, please contact Advantage Administrators.   As 2015 approaches, we will continue to provide our clients with suggestions and ideas on how to satisfy the ACA mandates using new affordable Contribution Based health plan designs.

 

This review is intended primarily to be a brief overview of the major provisions of heath care reform.  It is not intended to be legal, accounting or other professional advice.  Advantage Administrators assumes no liability whatsoever in connection with its use, nor are these comments directed to specific situations.