Obama administration delays employer mandate until 2015

published in McAfee & Taft EmployerLINC Alert | July 3, 2013

By Brandon Long

In perhaps the biggest healthcare reform news of the year, the Obama administration announced late yesterday that it is delaying the so-called “play or pay” mandate for one year until 2015.

A key component of healthcare reform is the play-or-pay mandate, which generally provides that an employer with at least 50 full-time employees must either (a) “play” and offer health coverage to its full-time employees, or (b) “pay” a penalty. Up until yesterday, this mandate was generally applicable January 1, 2014.

The Obama administration announced yesterday that it is extending the deadline until 2015 because of the numerous concerns voiced by employers. “Any employer shared responsibility payments will not apply until 2015,” wrote Mark J. Mazur, Assistant Secretary for Tax Policy, in a Treasury blog post. Mr. Mazur also indicated that additional guidance would be issued in the next week.

So, what does this mean? Many employers have been working hard to identify their full-time employees before 2014 by relying on the complex measurement and stability period rules that the IRS gave us in 2012 and again in January of 2013. For example, some of you are measuring your part-time employees’ hours – right now – to determine which of those employees average at least 30 hours per week. It seems likely that any measurement period that you are using now, in 2013, for purposes of identifying your full-time employees in 2014 is no longer relevant.

We strongly recommend that you contact your legal counsel and determine a new strategy, given the delayed deadline that was announced yesterday. Your new strategy may be to do nothing until additional guidance is issued, but you should discuss this with your legal counsel immediately.