Steve Brenton, President of the Wisconsin Hospital Association, released a forceful judgment of the Obama Administration’s decision to delay by at least one year implementation of the Affordable Care Act’s (ACA) employer mandate, calling it a “dogs breakfast.” As reported in the Milwaukee Business Journal, Brenton cited five very negative consequences he believes the delay will achieve:
– The delay energizes ACA opponents and reinforces to an already skeptical public the view that implementation will likely be uneven at best and a ‘third world experience’ at worst”;
– The delay “raises obvious questions” about the possibility of delaying other provisions, including the individual mandate, which Brenton said seems likely to be another casualty in the coming months;
– The delay will cost the federal treasury $10 billion in fines and penalties according to Congressional Budget Office projections;
– What he called a “meltdown of mandates” lessens the probability that new coverage will climb to anywhere near the numbers the Obama administration predicted in 2009 when touting the law and;
– The decision adversely impacts the viability of the insurance exchanges, which are foundational to the ACA.
The ACA requires companies that have 50 or more full-time equivalent employees to provide health insurance coverage that is “affordable” to their employees and meets minimum value standards. Under ACA rules, coverage is “affordable” if an employee’s share of premium costs for employee-only coverage is less than 9.5% of yearly household income. The minimum value standard is met if the health plan’s share of the total costs of covered services is at least 60%. The reporting requirements for employers (to demonstrate whether and how they meet these and other ACA requirements) haveleft company decision makers shaking their heads in frustration about how to meet the law’s requirements. The delay is intended to give government officials more time to sort it all out, apparently. According to Mark J. Mazur of the U.S. Department of the Treasury, by virtue of the delay, employers will not be required to make any shared responsibility payments until 2015.
Kathryn Johnson of the IRS Office of Associate Chief Counsel (Tax Exempt & Government Entities) authored a guidance document to provide “transition relief through 2014 for the information reporting and Shared Responsibility Provisions. The guidance document states that “proposed” rules for reporting requirements are expected to be published this Summer, and further explains:
T]his relief will provide additional time for time for dialogue with stakeholders in an effort to simplify the reporting requirements consistent with effective implementation of the law. It will also provide employers, insurers, and other reporting entities additional time to develop their systems for assembling and reporting the needed data. Employers, insurers, and other reporting entities are encouraged to voluntarily comply with these information reporting provisions for 2014 (once the reporting rules have been issued) in preparation for the full application of the provisions for 2015. However, information reporting under §§ 6055 and 6056 will be optional for 2014; accordingly, no penalties will be applied for failure to comply with these information reporting provisions for 2014.
The House Committee on Energy and Commerce has launched an investigation into the delay. Some lawmakers are concerned about the cost and full budgetary effect of the delay, due to the immediate loss of revenue from employer fines and penalties as a result of the mandate’s delay. On July 10, 2013, these lawmakers sent a letter to the Congressional Budget Office (CBO) seeking additional information. Among other information sought, the letter asks the CBO to “estimate the budgetary effects of a scenario where the Administration chooses to never implement the employer mandate and insurer reporting requirements.” On July 10, 2014, the House Ways and Means Health Subcommittee held a hearing to evaluate the delay’s potential affect upon implementing the rest of the ACA, including the individual mandate. Many lawmakers are calling for a delay of the individual mandate as well.
The ACA, if fully implemented, will radically transform our Country’s health care delivery system. It is designed to completely change the way medicine is practiced.
Kevin Little is a Georgia and South Carolina business and health care attorney who represents physician, physician groups, ambulance service providers, nursing homes and other health care providers and businesses. Our law firm’s focus is helping health care businesses succeed. Contact us at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta) to schedule a confidential consultation.
*Disclaimer: Thoughts shared here do not constitute legal advice.