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James Napoli

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James R. Napoli is a Senior Counsel in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center and head of the Health Care Reform Task Force, resident in the Washington, D.C. office.

Jim counsels employers on all aspects of their employee benefit programs and provides advice on matters affecting tax-qualified retirement plans such as: 401(k) plans and defined benefit plans, including cash balance plans; executive compensation plans; and welfare benefit plans. He is recognized by US Legal 500 as a leading lawyer in his field.

On Friday, September 13, 2013, the IRS released Notice 2013-54 and the DOL issued Technical Release 2013-03 in substantially identical form.  This guidance, which is generally effective January 1, 2014, provides much needed clarification on the application of certain provisions of the Patient Protection and Affordable Care Act (“ACA”) (annual limits and preventive care) to account-based plans such as HRAs and FSAs, and other types of arrangements that reimburse premiums (referred to in the guidance as “Employer Payment Plans”). 

The guidance indicates that the agencies are generally viewing HRAs, FSAs, and Employer Payment Plans as group health plans for purposes of ACA.  This means that these arrangements will qualify as “minimum essential coverage” for covered employees (i.e., they will preclude employees from receiving a premium credit), unless they are “excepted benefits” under HIPAA.  This also means that these arrangements will need to comply with ACA’s annual dollar limit prohibition and preventive care requirements, unless they are integrated with a compliant group health plan (or are excepted benefits). 

A federal district court recently ruled that, at the pleadings stage, Oklahoma established standing to pursue its suit to bar enforcement of the Affordable Care Act’s (“ACA”) shared responsibility penalty provisions. Oklahoma ex rel. Pruitt v. Sebelius, No. CIV-11-30, 2013 WL 4052610 (E.D. Okla. Aug. 12, 2013).

ACA contains a shared responsibility provision (also known as the “Employer Mandate”) under which, effective for 2015, large employers (those that employ 50 or more full-time equivalent employees) have to pay a shared responsibility payment if they do not offer minimum value, affordable coverage to their full-time employees. 26 U.S.C. § 4980H. As discussed in our May 31, 2013, blog post, there are two different penalties that could apply depending on whether an employer either (a) offers no health care coverage to at least 95% of its full-time employees or (b) offers full-time employees coverage that is unaffordable or does not provide minimum value. In either case, at least one full-time employee must qualify for a premium tax credit subsidy to purchase health insurance through a health care exchange before penalties apply.

On July 9th, the IRS issued Notice 2013-45 announcing that certain reporting requirements under the Patient Protection and Affordable Care Act (“PPACA”) would be delayed for one year.  Specifically, Notice 2013-45 states that certain tax Code reporting requirements will not apply for 2014 and, instead, are delayed for one year (presumably meaning that the first reports required to be filed will have to be submitted in January 2016).  In addition, because the information otherwise required to be reported is vital to the IRS’s ability to assess and collect the employer “play or pay” penalties under PPACA, imposition of the penalties are likewise delayed and will not apply until 2015.  Finally, Notice 2013-45 clarifies that additional guidance will be issued later this summer regarding these employer reporting requirements under PPACA.

The Obama Administration announced today that it intends to delay for one year the effective date of the employer “play or pay” penalties under health care reform, which were set to become effective in 2014. According to a press release this evening, the Administration intends to issue formal guidance next week implementing transition rules to…