IRS Final Rule Partially Delays ACA Employer Shared Responsibility Requirement

On January 10, 2014, the Internal Revenue Service (IRS) released final regulations governing the employer shared responsibility provisions of the Affordable Care Act (ACA).1 The final rule addresses application of the so-called “play or pay” requirement that was added by the ACA. Under this requirement, employers with 50 or more full-time employees (as such term is defined in the rules) must offer health coverage to full-time employees and their dependents or pay a penalty. Even employers that offer coverage may incur a penalty if that coverage does not provide “minimum value” to plan participants or if it is not “affordable.” Originally slated to become effective in 2014, the IRS had previously delayed the effective date of the employer responsibility provision until 2015. The long-awaited final rule further delays the effective date for employers with between 50 and 99 full-time employers until 2016. The final rule also provides that employers with 100 or more full-time employees must offer health coverage to only 70% of full-time employees in 2015, instead of 95%. The delay is certainly welcome news for employers and provides some much-needed clarity. Nonetheless, the final rule calls upon employers to make critical decisions in the months ahead as uncertainty about the play-or-pay requirement remains.