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National Restaurant Association - IRS explains 2014 transition rules for employers under health care law

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IRS explains 2014 transition rules for employers under health care law

The Internal Revenue Service has released additional guidance for employers on the Obama Administration's July 2 decision to make 2014 a year of transition and voluntary compliance for businesses on the health care law's employer mandate and reporting requirements.

The 2010 health care law requires "applicable large employers" -- defined as those with 50 or more full-time-equivalent employees -- to either offer coverage to full-time employees and their dependents or face penalties. The law requires employers to submit annual information returns to IRS each January based on coverage offered during the previous calendar year.

IRS Notice 2013-45, issued July 9, moves the deadline for the first annual information reports to Jan. 31, 2016, rather than Jan. 31, 2015. Applicable large employers will need to track information on each full-time employee and their dependents starting Jan. 1, 2015.

By pushing back the reporting mandate by a year, the IRS effectively gives large employers a one-year reprieve from the employer mandate and associated penalties, since the agency needs the employer reports in order to calculate and assess penalties against large employers who failed to offer coverage. Employer reports filed with the IRS will document how many full-time employees employers had each month during the previous year, and to whom they offered coverage. Employers' 2016 reports will cover health care coverage offered during 2015.  

The one-year transition relief applies exclusively to employer reporting and penalties. The law is proceeding as planned on other fronts, the Administration says. For example, individuals are still required to obtain health coverage starting Jan. 1, 2014, or face penalties. Employee-notification rules still take effect Oct. 1, 2013, requiring all employers covered by the Fair Labor Standards Act to provide employees with written notice about the new state exchanges. A 90-day maximum waiting period applies to all group health plans starting in 2014. All employers must report the value of health benefits on employees' W-2 forms starting in tax year 2013. And exchanges are still expected to open for business on Oct. 1 to begin enrolling millions of Americans in 2014 coverage.

Download the NRA's Health Care Law Primer for details on these and other requirements.

The National Restaurant Association co-leads the Employers for Flexibility in Health Care Coalition, or E-FLEX, a coalition of industries with similar workforce characteristics working for more flexibility for employers as the health care law is implemented. E-FLEX members, including restaurateurs who belong to the National Restaurant Association, are invited to join an Ernst & Young webinar on Thursday, July 18, from 2 p.m. to 3:15 p.m. ET on how the IRS's transition rules may affect their companies.

Washington Council Ernst & Young works with the E-FLEX coalition and understands the issues that affect restaurants in the health care law. Topics covered during the webcast will include:

  • A review of the Affordable Care Act provisions that have been delayed and those that remain in place.
  • Implications of the deferral of employer penalties for 2014 and next steps in the regulatory process for issuing reporting requirements.
  • New regulations affecting employers' interactions with insurance exchanges.

Sign up for the Ernst & Young webcast

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