The Affordable Care Act (ACA) imposes “pay or play” requirements on large employers. Under these requirements, large employers that do not offer health coverage to their full-time employees and their dependents, or that offer coverage that is either unaffordable or does not provide minimum value, may be subject to a penalty. This penalty is also referred to as a “shared responsibility payment.”
| The employer mandate provisions were set to take effect on Jan. 1, 2014. However, on July 2, 2013, the Treasury announced that the employer mandate penalties and related reporting requirements will be delayed for one year, until 2015. Therefore, these payments will not apply for 2014. On July 9, 2013, the Internal Revenue Service (IRS) issued Notice 2013-45 to provide more formal guidance on the delay. The Treasury plans to issue additional regulations on the reporting requirements over the summer. Future guidance may also impact the rules described in this document. No other provisions of the ACA are affected by the delay. |
On Jan. 2, 2013, the Internal Revenue Service (IRS) published proposed regulations that provide transition relief for employers participating in multiemployer plans from the “pay or play” requirements. Although the proposed regulations are not final, employers may rely on them until final regulations or other applicable guidance is issued.It is unclear how the delay of the employer mandate penalties will impact this transition relief.
Multiemployer Plans
A “multiemployer plan” is a collectively bargained plan maintained by more than one employer and has a joint board of trustees representing employees and employers. Each participating employer’s relationship with the plan, and the employee’s participation in the plan, differs from the typical single-employer-sponsored arrangement. For example, service at participating employers generally is aggregated to determine an employee’s eligibility to participate in the multiemployer plan, even though the participating employers generally are not related.Because many of the collective bargaining agreements governing multiemployer plans provide that contributions be made to the multiemployer fund based on requirements other than hours worked, contributing employers may not be in a position to know how many hours any individual employee worked.
Transition Relief
The proposed regulations provide transition relief that applies through 2014 for contributions made by applicable large employers participating in a multiemployer plan (applicable large employer members). This transition rule applies to an applicable large employer member that:
- Is required by a collective bargaining agreement to make contributions to a multiemployer plan that offers, to individuals who satisfy the plan’s eligibility conditions, coverage that is affordable and provides minimum value; and
- Offers coverage to those individuals’ dependents.
Under this transition rule, with respect to employees for whom the employer is required to make contributions to the multiemployer plan, the applicable large employer member will not be treated as failing to offer the opportunity to enroll in minimum essential coverage to full-time employees (and their dependents) and will not be subject to a “pay or play” penalty.This relief is available only with respect to multiemployer plans and does not apply to any single employer plan to which contributions are made pursuant to a collectively bargained agreement. The IRS is seeking additional comments on how the “pay or play” rules should apply to employers participating in multiemployer plans.
Source: Internal Revenue Service
Revised: 7.3.13
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