From the Hotline: Employer Mandate and Transition Rules

Question:  Under the employer mandate, will employers that renew on 6/1/14 have to be compliant on 1/1/15, or can they wait until their first renewal in 2015 which would be 6/1/15?

Answer: The Affordable Care Act’s “employer shared responsibility” provision (often referred to as the “employer mandate” or “play or pay”) originally was scheduled to take effect on January 1, 2014.  In early July 2013, the US Treasury Department announced a one-year delay, so employers are not exposed to any risk of penalty until January 1, 2015 at the earliest.  It is not clear whether employers whose group health plan operates on a non-calendar plan year basis might enjoy a delay beyond 1/1/2015.  The IRS regulations proposed for the original 1/1/2014 effective date had included a “transition relief” provision for non-calendar year plans.  In that case, an employer whose group health plan year was June 1 (instead of January 1) would have been able to avoid the risk of any “play or pay” penalties until June 1, 2014 (instead of 1/1/2014).  In announcing the one-year delay, however, the Treasury Department did not state that the transition relief provision also would be pushed out one year.  As of now, no further clarification has been released.

For reference, IRS Notice 2013-45 confirmed the one-year delay through December 31, 2014:  http://www.irs.gov/pub/irs-drop/n-13-45.PDF.