The recent postponement of the "pay or play" rule by the Treasury Department may have many businesses breathing a collective sigh of relief. However with the effective date looming at the start of 2015, organizations should continue making preparations to ensure they are in compliance when the rule takes effect.
Also known as the Employer Shared Responsibility Penalty, the regulation is one of the most controversial components of the Affordable Care Act because it requires organizations with 50 or more full-time employees to provide affordable, minimum essential health coverage or pay a penalty. Full-time employees are defined as individuals who work an average of 130 hours or more per month.
Many businesses and insurers have spent months preparing to file detailed reports with the government, which include providing information about how long each of their employees has had health coverage. The unexpected delay has left many organizations unsure how to proceed.
Businesses required to Âcomply with the pay-or-play rule that have started the process should continue their efforts. For those that haven't begun, now is the time to Âinitiate planning and implementation so that they're able to meet the Jan. 1, 2015, deadline.
Even with the delay, certain requirements still exist. For instance, by this Oct. 1, all employers are required to distribute a notice to all employees about the availability of health coverage through the public exchanges. The notice must provide workers with the opportunity to elect coverage either through their employer's plan (if one exists) or through a public exchange.
Employers should be prepared to provide employees with assistance in understanding information provided in the notice and be prepared to define specific terms used in the Affordable Care Act, including minimum essential health benefits, affordability, health exchanges and more. Employers also would be well served to have a general understanding of the comparative cost and coverage provided through the health exchanges in comparison to the employer-sponsored health coverage.
While additional information is due out soon regarding Âfurther requirements, thus far the delay specifically affects reporting and penalties, leaving other compliance requirements unaffected and required by Jan. 1, 2014. Starting on that date, waiting periods exceeding 90 days will be prohibited and employer group health plans must eliminate pre-existing conditions and annual caps on essential health benefits. In addition, all plans must cover certain clinical trials that they may have previously excluded as experimental or investigative.
Bottom line
Employers who have begun taking the first steps of compliance with the pay-or-play rule should continue their efforts and consider the next year a test run with a little extra time built in to make any necessary adjustments. Those who have not begun work on their plans for compliance should begin doing so soon, knowing that the process is complex and lengthy.
While the 12-month delay provides a bit of breathing room, compliance is still required once the calendar reads 2015.
About the authors: Ruth Marcott and Michael McNally are employee benefits attorneys who specialize in benefits and ERISA litigation. Both are in the St. Paul office of the Twin Cities law firm of Felhaber, Larson, Fenlon & Vogt.
