With the announcement of the delay in the employer mandate to January 1, 2015, also known as "Pay or Play", Discovery Outsourcing has been working with our insurance carriers and broker partners to determine how the change will affect our benefits plans, clients, and employees. New guidance was also issued that allows for a delay in the individual mandate for non-calendar year plans. On top of these two big changes comes ...
..Discovery’s open enrollment period. So what does all this mean for you and your employees? Let’s look at each development separately:
Postponement of Employer Mandate
When this was announced in early July, you could almost hear the collective sigh of relief from employers across the nation. But, while it does give employers more time to comply with the mandatory employer and insurer reporting requirements and the affordability and minimum value requirements, there’s still a host of other mandates that either remain in effect or will go into effect on January 1, 2014. Prior to the delay, Discovery Outsourcing was operating our plans and advising our clients based on transitional relief for non-calendar year plans that would allow postponement of the employer mandate until our plan renewal next year, November 1, 2014. At this time, it is not clear what the federal government will do with this previously issued transition relief. They did, however, issue transition relief for the individual mandate for employees of employers with non-calendar year plans.
Postponement of Individual Mandate
Industry experts all agree that, while the employer mandate may have been postponed until January 1, 2015, the individual mandate is still effective January 1, 2014 – at least for calendar year plans. Not long after the announcement of the delay in the employer mandate, transition relief was issued for employees eligible to enroll in non-calendar year employer plans. Notice 2013-42 provides that there will be no liability for the individual shared responsibility payment beginning January 1, 2014 through the end of the plan year in 2014. So, transition relief for the individual mandate has been issued for non-calendar year plans but nothing (so far) has been issued for calendar year plans.
What’s the Impact of these Changes?
For employers with 50 or more Full Time Equivalent employees, the postponement of the employer mandate provides a little more time to comply with the law, develop ways to simplify the reporting requirements and update systems in preparation for making coverage affordable and accessible to their employees. Here’s a list of some of the items impacted by the delay:
The individual mandate for calendar year plans still requires all individuals to carry minimum essential coverage beginning January 1, 2014. The only exception to this is for those individuals whose employers are on a non-calendar year plan and qualify for transitional relief under the preamble to proposed section 4980H of the Federal Register. Individuals whose employers qualify for transitional relief are also provided relief and will not be subject to the individual shared responsibility payment from January 2014 through the end of the plan year in 2014 (October 31 for Discovery’s plan).
The employer notification of the Health Care Marketplace, also known as an Exchange, will still be required to be provided to all employees. Discovery will be providing these notices prior to the deadline of October 1.
Plan design requirements will still be effective January 1, 2014 or depending on the requirement, some are effective on our plan year beginning November 1, 2014.
Nondiscrimination testing, if effective in 2014 (previously delayed and unknown when testing will be required)
Employers should still carefully examine their approach to health care reform. There could be unintended consequences if an employer decides not to offer affordable, minimum value coverage in 2014. For example, employees may qualify for subsidized coverage in 2014 through a Health Care Marketplace. The employer could see a backlash from employees who were happy with their subsidized coverage but will no longer be eligible for that coverage when the employer begins offering affordable, minimum value coverage in 2015. This could also cause participation problems in your health plan in 2014 and affect your rates down the road.
Bottom line? Go ahead, breathe that sigh of relief. If you’re a large employer, you’ve got more time to determine your strategy and how to put together a benefits program that works for your organization, makes your employees happy, and satisfies the government requirements. But don’t ignore potential pitfalls that could go along with delaying play or pay. Questions?
Give us a call. We’re your partner and we’re here to help.
Call us at 303.332.3301 or visit us online at www.discoveryoutsourcing.com
Postponement of Employer Mandate
When this was announced in early July, you could almost hear the collective sigh of relief from employers across the nation. But, while it does give employers more time to comply with the mandatory employer and insurer reporting requirements and the affordability and minimum value requirements, there’s still a host of other mandates that either remain in effect or will go into effect on January 1, 2014. Prior to the delay, Discovery Outsourcing was operating our plans and advising our clients based on transitional relief for non-calendar year plans that would allow postponement of the employer mandate until our plan renewal next year, November 1, 2014. At this time, it is not clear what the federal government will do with this previously issued transition relief. They did, however, issue transition relief for the individual mandate for employees of employers with non-calendar year plans.
Postponement of Individual Mandate
Industry experts all agree that, while the employer mandate may have been postponed until January 1, 2015, the individual mandate is still effective January 1, 2014 – at least for calendar year plans. Not long after the announcement of the delay in the employer mandate, transition relief was issued for employees eligible to enroll in non-calendar year employer plans. Notice 2013-42 provides that there will be no liability for the individual shared responsibility payment beginning January 1, 2014 through the end of the plan year in 2014. So, transition relief for the individual mandate has been issued for non-calendar year plans but nothing (so far) has been issued for calendar year plans.
What’s the Impact of these Changes?
For employers with 50 or more Full Time Equivalent employees, the postponement of the employer mandate provides a little more time to comply with the law, develop ways to simplify the reporting requirements and update systems in preparation for making coverage affordable and accessible to their employees. Here’s a list of some of the items impacted by the delay:
- Large employers will not be required to offer affordable, minimum value coverage until January 1, 2015.
- The requirement to track measurement, administrative and stability periods is delayed until 2015. However, keep in mind that these measurement periods will likely need to begin in 2014 in order to determine eligibility in 2015.
- Employer reporting requirements originally required to be reported in January 2015 will now be postponed until January 2016.
What Hasn’t Changed?
The individual mandate for calendar year plans still requires all individuals to carry minimum essential coverage beginning January 1, 2014. The only exception to this is for those individuals whose employers are on a non-calendar year plan and qualify for transitional relief under the preamble to proposed section 4980H of the Federal Register. Individuals whose employers qualify for transitional relief are also provided relief and will not be subject to the individual shared responsibility payment from January 2014 through the end of the plan year in 2014 (October 31 for Discovery’s plan).
The employer notification of the Health Care Marketplace, also known as an Exchange, will still be required to be provided to all employees. Discovery will be providing these notices prior to the deadline of October 1.
Plan design requirements will still be effective January 1, 2014 or depending on the requirement, some are effective on our plan year beginning November 1, 2014.
Nondiscrimination testing, if effective in 2014 (previously delayed and unknown when testing will be required)
Employers should still carefully examine their approach to health care reform. There could be unintended consequences if an employer decides not to offer affordable, minimum value coverage in 2014. For example, employees may qualify for subsidized coverage in 2014 through a Health Care Marketplace. The employer could see a backlash from employees who were happy with their subsidized coverage but will no longer be eligible for that coverage when the employer begins offering affordable, minimum value coverage in 2015. This could also cause participation problems in your health plan in 2014 and affect your rates down the road.
Bottom line? Go ahead, breathe that sigh of relief. If you’re a large employer, you’ve got more time to determine your strategy and how to put together a benefits program that works for your organization, makes your employees happy, and satisfies the government requirements. But don’t ignore potential pitfalls that could go along with delaying play or pay. Questions?
Give us a call. We’re your partner and we’re here to help.
Call us at 303.332.3301 or visit us online at www.discoveryoutsourcing.com