New regulations delay ACA’s ‘play or pay’ provision for some employers

In yet another unexpected turn in the implementation of the Affordable Care Act (ACA), the Obama administration announced Monday that it is delaying the application of the law’s employer responsibility provision (also commonly referred to as the “play or pay” provision) for some small employers until 2016. The administration let the public know about the delay when the U.S. Department of the Treasury and the IRS released final regulations addressing the much-publicized provision.

Under the play-or-pay provision, employers with 50 or more employees face penalties if they don’t offer health insurance coverage or if the coverage they offer is insufficient. The provision was originally supposed to take effect on January 1, 2014, but last summer the administration delayed implementation until 2015.

Now, under the new final regulations, employers with 50 to 99 employees will not face any penalties until 2016. However, they will have to report their workers and insurance coverage in 2015.

Large employers with 100 or more employees will still have to contend with possible penalties under the play-or-pay provision in 2015, but the regulations did provide them with some relief. The regulations phase in the percentage of full-time employees who must be offered coverage for employers to avoid penalties (70 percent in 2015 and 95 percent in 2016 and beyond).

The final regulations also provide clarification for a number of questions and issues that arose from the proposed play-or-pay rules issued in January 2013. Additionally, according to the Treasury’s press release, employers should be watching for more ACA regulations. Specifically, the release indicated the administration will be releasing regulations addressing employer-reporting requirements “shortly.”