“Play or Pay” Delayed, But What Hasn’t Changed?

On the eve of the long July 4th weekend, the Obama administration announced it is delaying three important requirements of ObamaCare that affect employers.

Requirements That Are Delayed

1. The “Play or Pay” Mandate

Under the “Play or Pay” mandate, large employers must offer affordable, minimum value health coverage to their full-time employees and their children or pay a penalty. Now, no penalty will be imposed for non-compliance prior to January 2015. It is not clear whether there will be any additional transition relief, such as for fiscal year plans.

2. Notifications of Health Coverage

Under ObamaCare, health insurers and group health plans must notify the IRS of who is covered under health coverage during each month of the year. Coverage information statements must also be provided to the affected individuals detailing the information reported to the IRS about the individual. This requirement is also delayed to the 2015 calendar year, with reporting required in January 2016.

3. Notifications Regarding Full-Time Employees and Offer of Coverage

Under ObamaCare, large employers must notify the IRS of who their full-time employees are for each month of the year and whether they were offered affordable, minimum value coverage. Large employers are also required to provide statements to their full-time employees detailing the information reported to the IRS about the employee. This requirement is delayed to the 2015 calendar year, with reporting required in January 2016.

Requirements That Are Not Delayed

The individual mandate to have health coverage is still effective January 1, 2014. Because of the delay of the employer mandate, enrollment through the state health insurance marketplaces, as well as the number of individuals who qualify for a premium tax credit, may increase for 2014.

No other effective dates have changed so employers must address other upcoming requirements like:

  • Paying the comparative effectiveness (PCORI) fee, which is due July 31, 2013 for many plans, including calendar year plans;
  • Distributing the notice about health insurance marketplaces to employees by October 1, 2013 (FLSA § 18B);
  • Updating plans to cover women’s preventive services with no cost sharing;
  • Eliminating waiting periods for health coverage in excess of 90 days;
  • Eliminating preexisting condition limitations;
  • Updating wellness programs to comply with new requirements, including providing a reasonable alternative even when the individual does not have a medical issue;
  • Reducing the out-of-pocket maximum, as necessary, to not exceed the out-of-pocket maximum permitted for high deductible health plans ($6,350 for self coverage and $12,700 for other tiers of coverage in 2014);
  • Removing health coverage provisions that discriminate against health care providers acting within the scope of their license or participants who enroll in clinical trials;
  • Updating HIPAA privacy policies, notices of privacy practices, and plan provisions to comply with HITECH by September 23, 2013 and updating business associate agreements by September 23, 2014; and
  • Making necessary changes to address the Supreme Court’s recent decision finding unconstitutional the provision of the Defense of Marriage Act that defined “spouse” for federal purposes as being only an opposite-sex spouse.

Employers should also continue to develop their strategy and administrative systems for complying with the “Play or Pay” employer mandate and related reporting requirements.