The Internal Revenue Service has released guidance (Notice 2013-45) explaining the transitional relief for 2014 from employer shared responsibility penalties for a failure to offer affordable minimum value health coverage (Internal Revenue Code § 4980H) and related reporting requirements (Code §§ 6055 and 6056).
Under the ACA’s employer shared responsibility penalty provisions, an applicable large employer (i.e., an employer with at least 50 full-time employees) is vulnerable to penalties for each month in which it fails to offer affordable minimum value coverage to full-time employees if at least one of its full-time employees obtains subsidized exchange coverage. The IRS will determine whether an employer owes this penalty based on information the employer is required to report under Code § 6056 (and information the IRS has about employees who obtained subsidized exchange coverage). According to Notice 2013-45, no such penalties will be assessed for 2014.
The IRS expects to issue proposed regulations on the reporting requirements of Code §§ 6055 and 6056 this summer. The agency plans to use the additional time before implementation to engage in dialogue with employers and other stakeholders to “simplify” the reporting requirements and afford employers more time to develop recordkeeping and reporting systems.
In its Notice, the IRS encourages employers to comply voluntarily with the reporting provisions for 2014 undefined once the reporting rules are issued undefined and to maintain or expand coverage in 2014. In the agency’s view, “[r]eal-world testing of reporting systems and plan designs through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2014.” Employers also should consider reviewing and commenting on the IRS’ information reporting rules when they are issued, especially as the enforcement delay is largely due to input from employers, according to the Obama Administration’s announcement.