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IRS Outlines Draft Employer Mandate Compliance Requirements

Capitol Connector
Your source for the latest updates from Capitol Hill. We translate policy into practice so you can learn how policy trends will affect your work and how best to prepare.

Rebecca Farley

Director, Policy & Advocacy, National Council for Behavioral Health

IRS Outlines Draft Employer Mandate Compliance Requirements

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Last Thursday, the Internal Revenue Service (IRS) posted draft forms that businesses will have to complete in order to comply with the Affordable Care Act’s requirement that certain employers offer health insurance to their employees, known as the “employer mandate.” Final drafts and detailed instructions for the forms are expected to be released in the coming months. The employer mandate applies to most organizations – including healthcare provider organizations – with more than 50 full-time employees, defined as employees who work 30 hours per week or more.

Some political analysts said the release of the draft forms suggests that the Obama Administration intends to move forward as planned with the employer mandate, which has already been delayed twice. However, other reports suggest that President Obama might delay the mandate for a third time, or extend the time allowed before full compliance is required.

Some Members of Congress are concerned about the political fallout from the employer mandate and are urging the Administration to consider once again delaying its implementation. Last Wednesday, Senator Mark Warner (D-VA) sent a letter sent a letter to Treasury Secretary Jack Lew urging to him consider easing the employer mandate’s burden on smaller businesses that might not be prepared for the volume of paperwork they will encounter as they navigate the ACA’s regulations. If the agency can’t lessen the reporting requirement, Warner suggested that the Administration be open to one more year-long extension.

Also last week, the IRS announced that financial penalties for U.S. residents who do not comply with the Affordable Care Act’s individual mandate in 2014 will be capped at $2,448. The amount is equal to the national average annual premium for a bronze-level health plan. Under the terms of the ACA, the penalty for the first year starts at $95 per person and can rise to as much as 1 percent of annual income. The latest figure limits what the government can charge people using the personal income computation. The penalties will increase to $325 or 2% in 2015 and $695 or 2.5% in 2016. Individuals with incomes below $10,150 are exempt from the mandate. The federal government estimates that nearly four million people could face the penalties by 2016.