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NRCA issues statement regarding employer health care mandate

July 2013

On July 2, the Obama administration announced it will delay the employer mandate components of the Affordable Care Act (ACA) by one year. The provisions of the law now will take effect Jan. 1, 2015, rather than in 2014. Therefore, employers with 50 or more "full-time equivalent" employees, as defined in the law, will have one more year to ensure they are in compliance with the requirement to provide government-approved health insurance or face certain Internal Revenue Service (IRS) penalties.

In a July 2 announcement, a Treasury Department spokesman said the decision was made to give the administration more time to consider ways to simplify the law's employer reporting provisions and provide more time for employers to adapt to the new requirements.

Under the ACA, large employers as defined in the law may be subject to a nondeductible excise tax under Internal Revenue Code (IRC) section 4980H if at least one full-time employee whose household income is between 100 percent and 400 percent of the federal poverty level receives a premium tax credit for exchange coverage and the employer either fails to offer coverage to full-time employees and their dependents or offers coverage to full-time employees that does not meet the law's affordability or minimum value standards.

According to the July 2 announcement, employer tax penalties under IRC section 4980H now will not apply until 2015.

The ACA also requires employers to report to the IRS information about the coverage they offer to full-time employees. Employers who offer self-insured plans, health insurers and other entities that provide minimum essential coverage also are required to report to the IRS information about who is enrolled in coverage. The July 2 announcement indicates that compliance with these reporting requirements now will become mandatory in 2015 and will only be voluntary in 2014.

The administration indicated that other components of the law, such as the individual mandate to purchase health insurance and the exchanges through which people will sign up for coverage and obtain subsidies, will move forward on schedule in 2014.

NRCA has opposed the ACA's employer mandate because of its complexity and fears it will further increase health insurance costs for employers. NRCA currently supports legislation introduced in Congress to repeal the mandate. Additionally, NRCA has provided official comments in the regulatory process aimed at making the law's provisions as practical as possible for employers.

To view the Treasury Department announcement, click here.

A formal regulation implementing the new effective date for the employer mandate is expected to be issued soon.

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