In a surprise move on Tuesday, President Obama announced that the employer play-or-pay requirements of the Patient Protection and Affordable Care Act (“PPACA”) were being delayed for at least a year. This move does not impact the implementation of other aspects of PPACA, including as the individual mandate, certain required health insurance provisions, and the health care marketplaces/exchanges designed to allow consumers to acquire health coverage. The President’s release said that the federal government was moving “full steam ahead” for the opening of the marketplaces/exchanges on October 1 of this year.
The President offered this explanation for the delay of the employer pay-or-play piece:
“First, we are cutting red tape and simplifying the reporting process. We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination. So we plan to re-vamp and simplify the reporting process. Some of this detailed reporting may be unnecessary for businesses that more than meet the minimum standards in the law. We will convene employers, insurers, and experts to propose a smarter system and, in the interim, suspend reporting for 2014.
Second, we are giving businesses more time to comply. As we make these changes, we believe we need to give employers more time to comply with the new rules. Since employer responsibility payments can only be assessed based on this new reporting, payments won’t be collected for 2014. This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers.”
This announcement comes as a relief to many larger employers, who have struggled to understand and plan for PPACA’s pay-or-play changes originally scheduled to become effective in 2014. Further guidance on the one year grace period is expected soon.