Employer Health Insurance Mandate and Reporting Delayed

In a post on the White House blog on July 2, 2013, the Obama administration unexpectedly delayed the mandate for “large” employers to provide minimum essential, affordable health insurance to full-time employees.  According to the law, the mandate begins after 2013 with a noncompliance penalty assessed on a monthly basis.  How the executive branch can unilaterally change the effective date of enacted law is a question many commentators are asking.  Nevertheless, affected employers may appreciate the one-year enforcement delay to 2015.  The Deseret News (7/3/2013) reported that in Utah, 93% of large employers already provide health insurance to their employees, so the delay will have minimal impact in Utah.  The Administration cited the complexity of the law for the delay, but some commentators smell political motivations in light of the coming 2014 election when the mandate was originally to begin.  The delay of the employer mandate does not delay the individual mandate, the establishment of health insurance exchanges, or other provisions of the Affordable Care Act.

Also delayed to 2015 is the employer’s annual insurance information return.  This return was to identify each full-time employee and the number of months each employee was covered by an employer-sponsored health insurance plan and whether the employee’s share of premiums was “affordable.”  Not only would the information assist the IRS in penalizing employers that fail to meet the mandate’s requirements, the information is critical to the insurance exchanges.  The exchanges need the information to determine who qualifies for premium support tax credits.  On July 5, 2013, the Administration released new rules that also postpone to 2015 the requirement for exchanges to verify an applicant’s income and health insurance status before granting tax credits.  So for 2014, applicants are on the “honor system” in providing truthful information to the exchanges for purposes of calculating the amount of the tax credits.  Given these postponements and previous adjustments, we are beginning to see evidence of the oncoming “train wreck” described by Obamacare supporter and retiring Montana Democrat, Max Baucus, several months ago.