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Business and Policy Areas
Business and Policy Areas

Employers Given Additional Year to Comply with Health Care Coverage Rules

July 11, 2013

In early July, the Department of the Treasury announced in a blog post that it will delay until 2015 enforcement of the employer penalty ("shared responsibility payments"), as well as detailed reporting requirements for employers and insurers, under the Patient Protection and Affordable Care Act (ACA, or the Act). The delay will allow more time for data collection, reporting systems testing, and stakeholder feedback before issuing final standards.

Section 4980H, which the ACA added to the Internal Revenue Code, requires employers with 50 or more full-time employees either to offer health care coverage to at least 95 percent of all full-time employees or pay an excise tax. The excise tax, assessed on a monthly basis, will equate to $2,000 per year, per full-time employee (except for the first 30 employees).

Employers that offer coverage to at least 95 percent of full-time employees may still be subject to a penalty if the coverage offered does not meet an affordability test. A monthly excise tax of $3,000 per year, per employee, will be imposed if the lowest-cost self-only coverage offered to the employee fails to meet the Act's affordability and minimum value requirements. The $3,000 excise tax applies only for each full-time employee who purchases coverage from a federal or state exchange and has income low enough to qualify for a premium tax credit. (More information on proposed employer shared responsibility rules)

In announcing the delay, Treasury explained that the postponement was in response to employers' concerns about their ability to meet reporting requirements related to health coverage offered to employees. Treasury needs the information to determine whether excise taxes apply.

In the absence of final rules in this area, colleges and universities have been grappling with how to treat student workers and adjunct faculty based on the coverage requirements and reporting systems. NACUBO and other higher education associations have submitted comments and continue to meet with Treasury officials to discuss treatment of student employees and adjunct faculty as final regulations are being developed.

These delays do not apply to other provisions of the ACA, including the individual mandate or the employer notice about the health insurance exchanges. While higher education institutions now have more time to address certain provisions of the law, leaders should press ahead to ensure compliance with key deadlines.


Mary Bachinger
Director, Tax Policy