The Pay-or-Play Rule (“Rule”) of the Patient Protection and Affordable Care Act (“PPACA”) is delayed one year and will not take effect until January 1, 2015, according to announcements through blogs of the Department of the Treasury and the White House. Also known as the “Employer Shared Responsibility Penalty,” the Rule is one of the signature and most controversial components of PPACA’s reforms.
Pay-or-Play Rule
Under the Rule, applicable large employers (those with 50 or more full time or full-time equivalent employees) are required to provide employees who work on average 130 hours or more per month with minimum essential health coverage that is both affordable and provides minimum value.
The Rule was supposed to be effective January 1, 2014, and employers were in the process of completing a lengthy list of administrative actions in order to be PPACA compliant by the original deadline. The Treasury cited the lack of guidance on the reporting requirements in PPACA as the reason for the delay.
Delay May Only Increase Uncertainty
The announcement was unexpected. With such a complicated overhaul of employer-provided health care coverage, it was welcome news to some. But many employers who have been actively preparing for the Rule’s effective date are now unsure whether they should move forward with compliance. At the same time, the delay gives those who haven’t yet begun preparing time to plan and manage implementation.
Additional guidance is expected on the exact details of the Rule delay and how it will impact other pieces of PPACA. The Treasury’s post indicates that premium tax credits will be available in 2014, and from that it seems almost certain that employers must distribute the notice of the availability of coverage through the exchanges on schedule, by October 1, 2013.
For now, other changes, including the elimination of pre-existing conditions, limits on waiting periods and the elimination of annual limits appear to be unaffected by the delay. The PCORI fee seems to be unchanged and, for some employers who sponsor self-insured plans, it may be due as soon as July 31, 2013.
Bottom Line
Employers who have begun taking the first-steps – including establishing measurement, stability and administrative periods – need to carefully consider how this news changes their strategy, if at all. To be sure, employers should wait for the release of additional guidance expected from the Treasury before making any final decisions.
Those who have not begun work on their plans for compliance should begin doing so soon, mindful that the work is complex and lengthy. Those who have started implementation should continue to attempt to comply and consider the next calendar year a test run, knowing that they have been provided some breathing room for later adjustments.
Attorney Michael G. McNally also contributed to this post.