Obamacare’s Employer Mandate Delays Head-to-Head

“[The President] shall take care that the laws be faithfully executed…” — Article II, Section 3 (The Faithful Execution Clause)

Yesterday’s announcement of additional Obamacare employer mandate delays offers us yet another occasion to turn to actual the law passed by Congress.  When the four statutory Obamacare provisions below are viewed head-to-head against the new Obama Administration/IRS regulatory guidance, it’s clear that one of these things is not like the other.

EXHIBIT I: EFFECTIVE DATE

Statutory Authority - PPACA Section 1513(d):

(d) EFFECTIVE DATE.—The amendments made by this section shall apply to months beginning after December 31, 2013.

Obama Administration/IRS - Preamble to the February 10, 2014 Final Regulations (Page 106):

Section 1513(d) of the Affordable Care Act provides that section 4980H applies to months after December 31, 2013; however, Notice 2013-45, issued on July 9, 2013, provides as transition relief that no assessable payments under section 4980H will apply for 2014…Notice 2013-45 provides that the employer shared responsibility provisions under section 4980H (and the information reporting provisions) will become effective for 2015.

Obama Administration/IRS - Treas. Reg. Section 54.4980H-1(b); 54.4980H-2(f); 54.4980H-3(f); 54.4980H-4(h); 54.4980H-5(g); 54.4980H-6(b) (starting on Page 156)

Effective/applicability date. This section is applicable for periods after December 31, 2014.

EXHIBIT II: EMPLOYER SIZE SUBJECT TO EMPLOYER MANDATE

Statutory Authority - IRC Section 4980H(c)(2)(A):

The term “applicable large employer” means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.

Obama Administration/IRS - Preamble to the February 10, 2014 Final Regulations (Page 123):

The Treasury Department and the IRS understand that application of section 4980H will involve changes for applicable large employers that did not previously offer coverage, or that did not offer affordable, minimum value coverage. A large percentage of those employers are in the smaller size range, such as those with fewer than 100 full-time employees (including FTEs).To assist these employers in transitioning into compliance with section 4980H, the transition relief described below is provided for all of 2015 plus, in the case of any non-calendar plan year that begins in 2015 (2015 plan year), the portion of that 2015 plan year that falls in 2016. For employers eligible for the transition relief described in this section XV.D.6, no assessable payment under section 4980H(a) or (b) will apply for any calendar month during 2015 or any calendar month during the portion of the 2015 plan year that falls in 2016.

EXHIBIT III: PERCENTAGE OF FULL-TIME EMPLOYEES OFFERED COVERAGE

Statutory Authority - IRC Section 4980H(a)(1):

[A]ny applicable large employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A (f)(2)) for any month…

Obama Administration/IRS - Preamble to the February 10, 2014 Final Regulations (Page 129):

As further transition relief, for each calendar month during 2015 and any calendar months during the 2015 plan year that fall in 2016, an applicable large employer member that offers coverage to at least 70 percent (or that fails to offer to no more than 30 percent) of its full-time employees (and, to the extent required under §54.4980H-4(a) and the transition relief in section XV.D.5 of this preamble, their dependents) will not be subject to an assessable payment under section 4980H(a).

EXHIBIT IV: CALCULATING THE EMPLOYER MANDATE PENALTIES

Statutory Authority - IRC Section 4980H(c)(2)(D)(i):

(D) Application of employer size to assessable penalties

(i) In general— The number of individuals employed by an applicable large employer as full-time employees during any month shall be reduced by 30…

Obama Administration/IRS -Preamble to the February 10, 2014 Final Regulations (Page 130):

For 2015 plus any calendar months of 2016 that fall within the employer’s 2015 plan year, if an applicable large employer with 100 or more full-time employees (including FTEs) on business days during 2014 (or an applicable large employer member that is part of such an applicable large employer) is subject to an assessable payment under section 4980H(a), the assessable payment under section 4980H(a) with respect to the transition relief period will be calculated by reducing an applicable large employer member’s number of full-time employees by that member’s allocable share of 80 rather than 30.


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