The IRS postponed for one year the large-employer health care penalty and certain information-reporting rules that had been due to take effect starting Jan. 1, 2014. The delay was informally announced July 2 on a Treasury Department blog, followed a week later by Notice 2013-45, which postpones to 2015 the information-reporting rules under Secs. 6055 and 6056 and the Sec. 4980H shared-responsibility penalty, to give employers, insurers, and other providers more time to adapt their health coverage and reporting systems.
The transitional relief from information reporting under Sec. 6056 is expected to make it impractical to determine which employers owe shared-responsibility payments for 2014 under the employer shared-responsibility provisions. Accordingly, the IRS will not assess any employer shared-responsibility payments for 2014.
The postponement will have no effect on other provisions of the Patient Protection and Affordable Care Act, P.L. 111-148. These include the availability of the premium tax credit under Sec. 36B, which assists certain low- and moderate-income individuals who enroll in a qualified health plan through a health insurance exchange (and who are not eligible for employer coverage that is affordable and provides minimum value) in paying their premiums. It also does not affect the individual mandate under Sec. 5000A, which imposes a penalty on individuals who do not have minimum essential coverage and will apply, as scheduled, beginning in 2014 (see “Line Items: IRS Issues Guidance on Minimum Essential Health Coverage, Shared-Responsibility Penalty").
Treasury expects to publish proposed regulations implementing the Sec. 6055 information-reporting requirements for insurers, self-insuring employers, and other parties that provide health coverage, and the Sec. 6056 information-reporting requirements for employers that provide health coverage to their full-time employees. The proposed rules will reflect the transitional relief for the information-reporting rules for 2014.
Although the effective date for these provisions will be 2015, the government will encourage voluntary compliance in 2014 to prepare for full application of the rules in 2015 and allow “[r]eal-world testing of reporting systems and plan designs.” In the meantime, the IRS wants additional time to discuss the reporting requirements with stakeholders to enable it to simplify the requirements while ensuring that the law is being implemented effectively.
By Sally P. Schreiber, J.D., a JofA senior editor.