IRS Guidance On Delay in Implementing Pay-or-Play Penalties of ACA Health Care Reform Law

The IRS issued Notice 2013-45 recently, the official guidance document explaining the one-year delay in the implementation of the employer pay-or-play penalties under the Patient Protection and Affordable Care Act ("PPACA") health care reform.

As announced in a Treasury blog, the IRS has delayed for one year the information reporting requirements (found in sections 6055 and 6056 of the Internal Revenue Code) that apply to insurers, self-funded plans, government agencies and large employers regarding health plan coverage.  This purpose of this delay is to allow the IRS addition time “for dialogue with stakeholders in an effort to simplify the reporting requirements”  and for employers and other reporting entities to “develop their systems for assembling and reporting the needed data.”  Since the collection of this information crucial for the IRS’ determination of an employer’s liability for pay-or-play penalties will not occur in 2014, the IRS has announced that it will not impose pay-or-play penalties for 2014.  In the Notice, the IRS states that it expects that proposed regulations on the information reporting requirements will be issued later this summer.

The Notice reiterates that this delay will have no effect on any other parts of PPACA, including the premium tax credit or the individual mandate.    

Based on this delay, employers may wish to consider delaying for a year the implementation of certain changes planned for group health plans for 2014 in order to avoid the pay-or-play penalties.  These changes include, for example, (1) expansions of eligibility for health benefits to all employees who work 30 or more hours a week; (2) changes to make health plan coverage “affordable” or to assure that it provides “minimum value”; and (3) the implementation of measurement and stability periods for seasonal and variable hour workers.  Of course, any such decision to delay may have an impact on employees, since they will be required to purchase insurance next year or pay a tax penalty if they do not have coverage through their employers or from another acceptable source, such as Medicaid or Medicare.  Employers will also want to consider the impact of their coverage decisions for 2014 on the availability of the premium tax credit:  employees who are not enrolled in employer-sponsored health plans and who are not offered affordable, minimum value coverage by their employers may qualify for premium tax credits when they purchase insurance through the exchanges.

 

New IRS Guidance Expected Over Delay of Affordable Care Act Employer Pay-or-Play Penalties

As described by my colleague Howard Bye-Torre in his client advisory published earlier today, Mark Mazur, Assistant Secretary for Tax Policy at the Treasury Department announced in a Tuesday blog post that the effective date for imposing employer pay-or-play penalties (also known “shared responsibility payments”) will be delayed by the IRS until 2015.

The IRS is expected to issue official guidance on this announcement next week. We will update readers on the guidance once it becomes available.

The IRS blog post is available here: http://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspx

OSHA Issues Interim Final Rules on Whistleblower Protection Provisions Under ACA

The Occupational Safety and Health Administration (OSHA) issued an interim final rule and request for comments regarding procedures for handling employee whistleblower complaints under the Affordable Care Act (ACA), Section 1558. This part of the ACA added a new Section 18c to the Fair Labor Standards Act (FLSA), which protects employees from retaliation for exercising certain rights under the ACA, including (1) receiving a federal tax credit or subsidy to purchase insurance through the employer or a future health insurance exchange, (2) reporting a violation of consumer protection rules under the ACA (which, for instance, prohibit denial of health coverage based on preexisting conditions and lifetime limits on coverage), and (3) assisting or participating in a proceeding under Section 1558.

The interim final rule states the time frames and procedures for bringing a whistleblower complaint under Section 18c and covers the investigation, hearing, and appeals processes. An employee has 180 days from the date of the alleged retaliation to bring a whistleblower complaint to the Secretary of Labor. Where a violation is found, remedies can include reinstatement, compensatory damages, back pay, and reasonable costs and expenses (including attorneys’ fees). If the employee brought the complaint in bad faith, an employer may recover up to $1,000 in reasonable attorneys’ fees.

The bar for an employee bringing such a complaint is relatively low, and the bar for an employer defending against the complaint is relatively high. The employee must only have a subjective, good-faith, reasonable belief that the conduct alleged in the complaint violates the whistleblower protections; the employee need not prove that the conduct was an actual violation of law. The conduct complained of must only be a contributing factor in an adverse employment decision for the employee to make his or her case. The employer must then demonstrate through clear and convincing evidence that it would have taken the same adverse action without the protected activity. 

Each party has 20 days after filing the complaint to submit a position statement and supporting documents, and can also request a meeting to present its position to OSHA. OSHA has 60 days from the filing of the complaint to investigate and issue written findings and, if a violation is found, a preliminary order providing relief to the employee.   There is a process to challenge and appeal OSHA’s written findings and order. There is also a process for an employee to file a complaint in federal court either within 90 days after the employee receives OSHA’s findings, or if no final agency order is issued within 210 days of the filing of the complaint. 

For more information, see the DOL fact sheet, which describes how to file a complaint. If you have comments on this interim final rule, they must be submitted within 60 days of the rule’s publication in the Federal Register (Feb. 27, 2013). Comments may be submitted electronically at the eRulemaking portal.

Stoel Rives Presents Webinar On Employer Group Health Plans After U.S. Supreme Court Decision Upholding "Obamacare"

As everyone who was not on Mars this summer knows, the U.S. Supreme Court issued a surprising and historic decision upholding key provisions of President Obama's Affordable Care Act ("ACA").  To help employers navigate the requirements of the law now that it has the stamp of approval of the Supreme Court, and to provide other updates on developments in federal health care reform, members of the Stoel Rives employee benefit and employment groups have been touring the region with a 90-minute presentation entitled "Health Care Reform After the Supreme Court’s Decision: Group Health Plan Update 2012."  The seminars were presented by Stoel Rives attorneys Howard Bye-Torre, Melanie Curtice, Bethany Bacci, Steve Woodland, Matthew Durham, Carolyn Walker, James Dale, Renae Saade, and Tony DeCristoforo in Portland, Seattle, Salt Lake City, Boise, and Anchorage during September and October.

Shameless Plug Alert!  Webinar Presentation on October 25, 2012

If you missed the show when it came to your town or are just interested in learning about this complex and evolving area of employee benefits law, there is one more opportunity to attend the seminar via a webinar which will be conducted on Thursday, October 25 at noon, Pacific Time. To RSVP for the webinar and get instructions for attending, please click here.

What's Covered

The seminars reviewed the Supreme Court decision upholding the constitutionality of the Affordable Care Act (ACA), and also some of the ACA's impacts which have already been felt by group health plans and employers, such as the requirement to cover children through age 26.  Regulatory developments planned for 2013 are also discussed, including:

  • the requirement to report the cost of health care coverage on W-2s;
  • the new disclosure document required by the ACA, the Summary of Benefits and Coverage (SBCs);
  • required 100% coverage for FDA-approved contraceptive methods for women; and
  • the reduction to $2,500 of the maximum amount that an employee can contribute to a health care flexible spending account. 

The seminars also discussed the new two federal fees on group health plans for 2013-2018, the Patient-Centered Outcomes Research Institute fee and the transitional reinsurance program fee. The seminars concluded with a discussion of the ACA requirements for 2014, including

  • the mandate for individuals to have health insurance coverage;
  • employer pay-or-play penalties, including new IRS guidance on the definition of “full-time” employees for purposes of the penalties;
  • recent IRS guidance on the 90-day maximum waiting period for health plans. 

We look forward to seeing you online for the webinar on October 25.