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IRS officially postpones employer mandate

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The delay in the employer mandate of the Patient Protection and Affordable Care Act will have no effect on workers’ access to premium tax credits or individuals’ responsibility to have health insurance.

IRS officials gave that advice in IRS Notice 2013-45, a document released Tuesday, explaining the “transition relief” that the Obama administration will provide for employers trying to comply with PPACA.

The notice affects compliances with three sections of the Internal Revenue Code created by PPACA: IRC section 6055 and 6056, which cover information reporting, and IRC Section 4980H, which spells out the “employer shared responsibility provisions.”

PPACA calls for large employers to provide affordable “minimum essential coverage” with a minimum value or else pay tax penalties. Another provision, the individual “shared responsibility” provision — the individual mandate — calls for many individuals to own a minimum level of coverage or else pay a tax penalty.

A Treasury Department official startled employers and brokers last week by announcing a decision to delay enforcement of the employer mandate until 2015 in a blog entry.

In the new notice, IRS officials said they expect to propose rules for the employers, insurers and other parties that need to report coverage information “this summer.”

The proposed rules will reflect the one-year mandate implementation delay, officials said.

Although the IRS, an arm of the Treasury Department, will put off enforcing the rules, “employers, insurers and other reporting entities are encouraged to voluntarily comply with these information reporting provisions for 2014 (once the information reporting rules have been issued),” officials said.

Because employers and the IRS won’t have the reporting rules needed to implement the employer coverage mandate in 2014, employers will not have to comply with the mandate or pay coverage-related penalties in 2014, officials said.

“Real-world testing of reporting systems and plan designs through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2015,” officials said.

The postponement of implementation of the coverage mandate and employer reporting provisions will not affect individuals’ eligibility for the PPACA premium tax credits available through the new health insurance exchanges, officials said.

The tax credits are supposed to be the major vehicle for helping low-income and moderate-income individuals pay for individual and family health coverage.

The transition relief “has no effect on the effecitve date or application of other Affordable Care Act provisions, such as the premium tax credit under [IRC] Section 36B or the individual shared responsibility provisions under Section 5000A,” officials said.

The IRS has listed Kathryn Johnson of the IRS Office of Associate Chief Counsel for tax-exempt and government entities as the main author of the notice.

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