Several Affordable Care Act Information Reporting Requirements to be Suspended Until 2015

By: James D. Silverman, Esq.

On July 2, 2013, the Treasury Department announced that it will suspend certain Affordable Care Act information reporting requirements under Internal Revenue Code sections 6055 and 6056 for a year (until 2015). The Department used this suspension as a reason to suspend the “shared responsibility” (a.k.a. employer mandate) requirements for a year. “Large employers,” those that have 50 or more (full-time equivalent) employees, therefore, will not be subject to penalties for 2014 for not providing health insurance to employees or for providing health insurance that does not include “minimum essential coverage.” Small employers are not subject to the “shared responsibility” rules. Click here to read the Treasury announcement.

The Affordable Care Act has a clear effective date, and there is no known legal authority for the Treasury Department to suspend the law.  Therefore, at least in theory, the Treasury Department or a court could retroactively impose the “shared responsibility” penalties in the future.

The suspension does not apply to individuals, who will still be subject to the (largely unenforceable) individual mandate in 2014. Certain individuals will still be eligible for premium tax credits. Without the employer reporting requirement, it may be impossible for the government to verify who is eligible for the credit. The Department of Health and Human Services announced, buried within regulations issued on July 5, 2013, that individuals in the District of Columbia or a state that runs its own exchange may self-verify their eligibility for the tax credit, thereby opening the door for tax fraud. [PA, OH, WV, DE and IL are among the states without state exchanges. CA and MD are among the states with exchanges. For a full list of state exchange implementation, please click here.]

Some employers were considering firing or reducing hours for employees in order to avoid the employer mandate penalties, and some commentators have suggested that the motivation for the one-year suspension was to push the lay-offs past the 2014 election.

If you need help coping with these recent regulatory changes, please feel free to contact Leech Tishman’s Employment Practice Group.

James D. Silverman practices in Leech Tishman’s Taxation and Employment Practice Groups. He can be reached at 412.586.0711 or jsilverman@leechtishman.com. Please feel free to contact Jim with any questions regarding the implications that the Affordable Care Act may have on your business.

Leech Tishman is a firm dedicated to providing full-service commercial legal services to individuals, businesses, and institutions. We combine a deep understanding of our clients and their businesses with skilled legal counsel to find solutions. We offer legal services in alternative dispute resolution, bankruptcy & creditors’ rights, construction, corporate, employment, energy, environmental, safety & toxic torts, estates & trusts, government relations, insurance coverage & corporate risk mitigation, intellectual property, litigation, real estate, and taxation. Leech Tishman has offices in Pittsburgh, PA, Chicago, IL, New York, NY, Los Angeles, CA and Wilmington, DE. For more information call 412.261.1600 or visit www.leechtishman.com.