The Internal Revenue Service has announced its intent to delay any excise tax penalties on employers with >50 employees (Full-time Equivalents or FTEs) failing to offer adequate and affordable coverage to FTEs in 2014. The penalties are expected to come online one year late, in 2015.

The news is welcome to employers near or above the 50 FTE mark, yet brings into question how they should alter the plans which were being feverishly laid to comply on time. The major issues at stake relate to how these mid-sized and larger employers will measure and determine who is full-time and eligible for coverage, and how to comply with reporting and employee notification requirements (under Affordable Care Act sections 6055 and 6056) yet to be defined.

If the employer delays making a 30-hour per week employee eligible for coverage until 2015, no excise taxes will be levied for 2014. But employers are still under a tight time frame to build technology and administrative solutions to track hours for these employees. For employers planning to use a 12 month measurement and 12 month stability period for testing employee eligibility for 2015 (expected to be the norm), systems will still need to be operational this fall, about three months from now.

Reporting regulations on sections 6055 and 6056 are expected this summer, but will postpone the due date for compliance to 2015. The nature of the requirements will probably give employers until early 2016 to send information returns to the IRS and/or new certificates to employees.

Despite the delay in applying excise taxes, employers should still plan to implement many other ACA provisions, including the required public exchange notice to employees by the October 1, 2013 deadline.

For a quick look at the IRS statement about the delay, see this link: