US Suspends Business Obamacare Reporting To IRS
09 July 2013
Posted by: Author: Mike Godfrey
Author: Mike Godfrey
The United States Administration has announced that it will provide an additional year before the Affordable Care Act (ACA) mandatory employer reporting requirements begin and, since employer responsibility payments can only be assessed based on this new reporting, those payments will also not be collected for 2014.
Key provisions of the ACA are the "employee mandate" and "employer mandate" in that most Americans will be required to maintain "minimum essential" health insurance coverage, and large employers will be encouraged to offer that health coverage. Beginning in 2014, those individuals and employers who do not comply with their mandates were to make "shared responsibility" payments, or tax penalties, to the Internal Revenue Service (IRS).
For individuals, that payment will be equal to the greater of USD95 or one percent of their taxable income in 2014, USD325 or two percent in 2015, and USD695 or 2.5 percent from 2016 onwards. Individuals will thereby, it is said, be able to choose not to have health insurance and pay higher taxes, or purchase health insurance and pay lower taxes.
Large employers with 50 or more full-time workers are also to be encouraged to offer that health coverage, or pay a penalty tax to the IRS of USD2,000 to USD3,000 per employee if any of their workers (exempting the first 30) had to obtain, instead, health insurance coverage through a health insurance exchange.
However, the Treasury Department has now said that it has listened to business concerns that the IRS reporting called for under the ACA about each worker's access to and enrollment in health insurance requires new data collection systems and coordination, and has confirmed that it will re-vamp and simplify the reporting process.
While that process is in hand, it is to suspend the large employer reporting for 2014, and, as employer mandate payments can only be assessed based on that reporting, employers would also not be assessed for penalties before 2015.
On the other hand, the Treasury Department has also confirmed that no other ACA provisions are to be delayed. That means that the individual mandate, and the assessment of its tax penalties, will still apply in 2014, as will the tax credits for qualifying individuals who purchase health insurance through an exchange.
John Boehner (R – Ohio), the Speaker of the House of Representatives, concluded that delaying the employer mandate is "a clear acknowledgment that the law is unworkable," and that President Obama should recognize "the need to release American families from the mandates of this law as well."
The Committee for a Responsible Federal Budget has pointed out that, if the employer penalty is permanently repealed, as has been called for by some, "then that would have more significant fiscal implications. By its (very rough) estimates a permanent repeal could increase spending by roughly USD31bn to USD63bn over ten years, and decrease revenues by roughly USD140bn."
"The Administration did not indicate plans to extend the delay, and in fact strongly encouraged employers to voluntarily implement the reporting requirements in 2014 in preparation for full implementation in 2015," it added. "However, if the Administration does decide to delay these provisions beyond 2014, or lawmakers in Congress enact a repeal, then that will have a much larger effect on increasing the deficit and should be offset.".