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It’s Official: IRS Issues Guidance Affirming One-Year Delay in the Affordable Care Act Employer Mandate and Related Reporting Rules

On July 9, less than a week after the Obama administration announced a one-year delay in the enforcement of the employer shared responsibility (aka “pay-or-play”) rules,1 the IRS has issued guidance making the move official. The guidance — Notice 2013-45 — refers to the delay as “transition relief for 2014” from the Act’s employer shared responsibility provisions and related reporting requirements.

  • Regards employer shared responsibility, the Notice asserts that the relief is intended to “to provide employers, insurers, and other[s] … time to adapt their health coverage and reporting systems”; and
  • Regards the reporting requirements, the Notice says that the relief is intended to “provide additional time for input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the law.” (The information reporting rules have not yet been issued.)

Notice 2013-45 Q&As

The Notice, which is presented in question and answer format, answers the following questions:

(1) When will the rules be published regarding the Act’s information reporting requirements?

This question addresses particular reporting rules that are found in Internal Revenue Code sections 6055 (relating to insurers, self-insuring employers, government agencies, and other parties that provide health coverage) and 6056 (imposing a separate reporting requirement on applicable large employers with respect to the health coverage offered to their full-time employees). The Notice clarifies that “no penalties will be applied for failure to comply with these information reporting provisions for 2014.” Interpretive guidance under the reporting rules will be issued this summer.

(2) What does the transition relief mean for application of the Employer Shared Responsibility Provisions in 2014?

The response makes clear that the employers that are subject to the Act’s employer shared responsibility provisions — “applicable large employers (i.e., those with 50 or more full-time and full-time equivalent employees on business days during the preceding calendar year) — will not be required to determine or remit payments irrespective of whether they offer “minimum essential coverage” under an “eligible employer sponsored plan.” (The terms “minimum essential coverage” and “eligible employer sponsored plan” are explained in our previous client advisory of January 16, 2013.)

(3) What is the impact of the delay on access by low- and moderate-income employees to the premium tax credits provided by state-based, partnership or Federally-facilitated insurance marketplaces?

The Notice emphasizes that individuals will continue to be eligible for the premium tax credits if their income is within the range specified by law and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value. (The particulars of the premium tax credits rules are explained in our previous client advisory of May 16, 2013.) As a result, if an employer does offer minimum essential coverage under an eligible employer sponsored plan, and if that coverage is both affordable and provides minimum value, then the employee will not qualify for a premium tax credit irrespective of his or her household income.

(4) Does the delay affect any other provision of the Act?

No. The transition relief through 2014 for purposes of the Act’s employer shared responsibility rules and the reporting provisions described above do not modify or change any other provision of the Act, including the penalties imposed on individuals for failing to maintain minimum essential coverage.


Business groups were generally elated with the original announcement, and their advisors will similarly welcome the Notice. Compliance with employer shared responsibility rules is costly, and it has proved to be more complicated than many expected. Proposed regulations issued at the end of 2012 included a good deal of flexibility, but that flexibility comes at the cost of added complexity. The delay gives employers more time to understand and navigate these rules. But it also renders moot certain transition rules that require employers to take hours of service into account before January 1, 2014. Thus, data collection for compliance in 2015 will likely commence on and in some cases even before January 1, 2014.

The Act’s reporting rules are expansive. The delay takes the pressure off the regulators to issue rules prematurely. They now have time to carefully consider and integrate public comments, and provide rules that are at the same time workable and faithful to the statute.

The delay will also likely be welcome by insurance carriers who have been slow to develop products for the large group market. While the standards for plan actuarial value (or plan generosity) in the individual and small group as contrasted with the large group market and self-funded plans both refer to a 60% threshold for covering plan costs, the standards are different. The delay should give carriers the time to make plans available for large groups that are tailored to the specific requirements of the law. The Treasury Department and IRS will also need to modify existing guidance to take account of the delay.

While the delay in the implementation of the employer shared responsibility rules and the reporting rules is certainly welcome, employers would be wise to use this opportunity to focus on, rather than simply not think about, these rules. These rules have been delayed, not repealed, and they continue to represent a formidable compliance challenge.


1 The delay was announced in postings to the websites of both the White House (
and the Treasury Department (


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Alden J. Bianchi

Member / Chair, Employee Benefits & Executive Compensation Practice

Alden J. Bianchi is an employee benefits and compensation attorney at Mintz. He advises clients on retirement plans, compensation arrangements, ERISA issues, benefits issues in mergers and acquisitions, and health and welfare plans. Alden is an authority on health care reform.