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Official Guidance Issued Regarding Delay Of PPACA's Employer "Play Or Pay" Payment Provisions

Jul 18, 2013

By Stephanie L. Hicks

As outlined in a prior E-Alert, the government announced a one-year delay of the enforcement of the Patient Protection and Affordable Care Act's ("PPACA") employer shared responsibility payment provisions, commonly referred to as the employer "play or pay" provisions. PPACA generally requires all employers with 50 or more full-time employees to offer their full-time employees health insurance coverage or pay significant penalties beginning January 1, 2014. Enforcement of these employer shared responsibility payment provisions has been delayed until 2015, with the announcement initially made on the Department of Treasury and White House blogs.

The IRS formalized the one-year delay in Notice 2013-45. The Notice reiterates that the driving force behind the delay was the PPACA information reporting requirement, which is integral to the administration of the employer shared responsibility payment provisions. PPACA requires information reporting by applicable large employers with respect to the health care coverage offered to their full-time employees. Even though the information reporting requirements have been delayed, the IRS encourages employers to voluntarily comply with the proposed information reporting rules when they are eventually issued in preparation for full application of the provisions in 2015.  However, no penalties will be assessed for employers who do not comply with the reporting requirements for 2014.  In addition, no employer shared responsibility payments will be assessed in 2014 given that the delay of the information reporting requirements until 2015 makes it impractical to determine which employers would owe such payments.

The Notice makes it clear that the one-year delay has no effect on the effective dates of other PPACA provisions. For example:

  • Employers must still provide the Exchange Notice to all employees by October 1, 2013;
  • Plans must not impose waiting periods greater than 90 days effective for plan years beginning on or after January 1, 2014; and
  • Group health plan mandates on cost-sharing (such as limits on out-of-pocket maximums) are still effective for plan years beginning on or after January 1, 2014.

You can find a copy of IRS Notice 2013-45 at http://www.irs.gov/pub/irs-drop/n-13-45.PDF .

If you have any questions about the employer "play or pay" provisions or about health care reform in general, please contact:

Ed Hammond at ehammond@clarkhill.com or (248) 988-1821;

Kristi Gauthier at kgauthier@clarkhill.com or (248) 988-5854; or

Stephanie Hicks at shicks@clarkhill.com or (248) 988-5893 or another Clark Hill or Clark Hill Thorp Reed labor or employment attorney.