By Josie Martinez, Senior Partner and Legal Counsel
EBS Capstone, A UBA Partner Firm
As you know by now, the federal government announced that the employer reporting requirements and the employer shared responsibility/Play or Pay penalties are delayed until 2015. The breaking news, disseminated via the Treasury Notes blog, is intended to address the “concerns about the complexity of the requirements and the need for more time to implement them effectively.” Many affected business owners are exhaling a sigh of relief as they were struggling to come into compliance with the Play or Pay rules. However, delay does not mean “gone forever.” While certainly a reprieve, it is not a permanent reprieve and the clock is still ticking. The problem is that delays like the one recently announced only make it easier to push off critically important decisions and action plans.
While the urgency of reporting and tracking employee hours is slightly relieved, most businesses still need to address policies and procedures to track employee hours with respect to health plan eligibility for 2015. Most still have little or no awareness of the “suggested” IRS “Look Back Measurement Method,” not to mention the nuances and implications of the method. But this eligibility tool will need to be reviewed, mastered, adopted, and actualized by many employers in the next five short months.
A related issue is whether the transitional rules will be extended into 2015. At this time, it is unclear if the transitional rules that were intended to provide relief to fiscal year plans until mid-2014 will also apply during 2015. Thus, employers must operate under the assumption that they will need to start the tracking/counting process at the beginning of 2014 for purposes of coverage by the Play or Pay rules on Jan. 1, 2015; but will fiscal year plans be able to delay the tracking of employee hours for eligibility purposes until the renewal date in mid-2015? At a minimum, we suggest employers should begin such tracking on or before the renewal date in mid-2014. Employers may also wish to voluntarily comply with the new IRS reporting requirements in 2014 in order to start collecting data and develop/test systems to work out any reporting kinks in advance of 2015.
Employers should be using this time wisely, having been given the opportunity to more carefully put administrative systems in place and strategize about the implementation of healthcare reform in their organizations. Employers that are ecstatic about escaping potential fees for a year may forget that certain healthcare reform provisions remain in effect, such as the PCORI fee, elimination of all pre-existing conditions exclusions, 90-day waiting period limits, employee notice of exchanges by Oct. 1, new wellness program requirements, and so on. This delay also does not impact the implementation of the required health exchanges in 2014, or the individual mandate that requires individuals, starting in 2014, to have health coverage or pay a penalty. Even the Treasury cautions…“During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage.” For the time being, however, employers can be relieved to have an additional year to evaluate their choices, strategies and protocols with a sense of renewed hope that perhaps compliance with the PPACA going forward will be simplified.