Enforcement of Employer Mandate Delayed Until 2015

This evening the White House and U.S. Department of Treasury announced that the effective date of the employer shared responsibility component (also known as the employer pay or play mandate) of the Affordable Care Act will be delayed until 2015. Accordingly, businesses will not be penalized in 2014 for failing to provide health care coverage to their full-time employees. Formal guidance implementing this major change is expected later this week.

In explaining its decision both the White House and Treasury cited ongoing complaints from employer groups about the administrative burden of reporting requirements as well as the penalties that would be imposed upon large employers (generally those with more than 50 employees) who fail to provide coverage that meets applicable requirements. The Administration hopes that waiting until 2015 to enforce the employer mandate will give businesses more time to adapt their group health benefit coverage to the requirements of the Affordable Care Act and might provide an opportunity to simplify the reporting requirements.

Note that the delayed enforcement of the employer mandate does not affect the many provisions of the Affordable Care Act that have already taken effect, such as the mandated provision of preventive care benefits, dependent coverage to age 26, and other requirements that apply generally to group health plans. Nor does it appear that this major shift in policy will affect the establishment of state health insurance exchanges or slow the pace of regulatory guidance. Indeed, according to the White House and Treasury the state health insurance exchanges are on target to open on October 1, and the Administration will strongly encourage voluntary compliance with the tax reporting requirements and attempt to engage in “real-world testing of reporting systems” in 2014.

We will have more to say about this important development soon.