The mid-summer announcement that the IRS is delaying the mandatory employer and insurer reporting requirement will significantly benefit large employers. The question now is how many employers will recognize how to take advantage of this delay. A few months have passed, what have you done? If your company is a large employer this is what you need to do with your healthcare plan before the end of 2013.
First, don’t be fooled into believing that the Affordable Care Act will not be enacted. The delay in the pay or play tax is only one aspect of the law. Here are just a few parts that are moving forward in 2014:
1. Total prohibition of preexisting conditions.
2. The lifting of annual maximum limits
3. Guaranteed issue
4. Guaranteed renewability
5. Implementation of the SHOP Exchange Program
6. Implementation of the Individual Exchange Program
The benefit the delay offers is that there is more time for employers to get prepared for the pay or play tax. Many large businesses (those with over 50 employees) rely on full time and part time employees. The Affordable Care Act does define a full time employee as one who works 30 hours a week or more. Healthcare coverage is only required to be offered to full time employees.
However large employers cannot suddenly decide to shift employees to part time on January 1, 2015. To take advantage of the part time status of some employees, thus saving on healthcare cost, employers must follow specific administrative and stability period requirements. Employers must establish, track and document the hours worked for each part time employee.
In their current form, the rules for establishing and tracking the administrative and stability period is complicated. The initial law created a twelve month period that employers had to track part time employee status. The Treasury Department did offer transitional relief by allowing employers to use a six month period to begin. Few employers took advantage of this offer to establish a system of reporting and that was one of the factors that lead to the delay of the reporting requirements. With extra time to prepare for the new requirements, employers should not expect any leniency. Based on the Treasury Department’s recent comments, they may make a change in these requirements to make it easier for employers to comply. If new measurement guidelines are established before the end of 2014, this will give employers enough time to set the new measurement period. This will allow employers to measure and document their part-time and full time employees’ hours worked for an entire year. Then by end of 2014 they can see who they are expected to offer insurance to for the 2015 year.
Even though they are complicated, there are guidelines in place now. Employers should review the capability of the reports available in their payroll systems. Employers who cannot verify part time employee status within these guidelines will be subject to offering healthcare insurance or pay the “play or pay tax. If new measurement guidelines have not been released by the IRS by the end of the third quarter, employers should be prepared to verify hours worked by employees under the current guidelines and add a document to their corporate minutes to confirm the establishment of administrative and stability period procedures.
October 1st is also a significant deadline for employers. Every employer, those that do offer healthcare and even those who do not, MUST provide a notice to employees concerning the availability of health insurance exchanges.