NAHU: Employer mandate delay 'necessary' despite $12 billion cost

Originally posted July 30, 2013 by Alex Wayne (Bloomberg) and EBA staff on

A National Association of Health Underwriters spokeswoman says that while there are "short-term financial repercussions" to the employer mandate delay, "we believe this delay was necessary to continue the economic upturn we have seen in the past few months and ensure that American businesses will be able to provide their employees with the health insurance they want and need in the long term.”

President Barack Obama’s decision to give employers a year before they’re required to provide health insurance for workers will cost taxpayers $12 billion, the Congressional Budget Office says in a letter to members of Congress.

The health law will now cost $1.375 trillion through 2023, an increase of $12 billion since May, the CBO says. The government will lose $10 billion in penalties that companies would have paid next year for not providing employee health plans, and taxpayers will spend $3 billion more on subsidies for workers who instead will buy coverage on the exchanges.

The White House announced the delay on July 2, in response to a lobbying effort from business groups. The Affordable Care Act requires companies with 50 or more workers to offer health insurance to their workers or pay fines of as much as $3,000 per employee if they don’t. Now, companies don’t have to provide coverage until 2015.

“Some large employers that would have offered health insurance coverage to their employees in 2014 will no longer do so as a result of the one-year delay of penalties for those that do not offer affordable coverage,” Douglas Elmendorf, the director of the CBO, wrote in the letter.

The costs of the delay were offset by about $1 billion because of “small changes,” CBO said, including an increase in income tax collections from people who don’t get coverage at work. The value of employer-provided health insurance isn’t taxed, while workers who get higher pay to buy insurance on their own would have to pay income tax on that compensation. CBO also reports that “one million fewer people are expected to be enrolled in employment-based coverage in 2014” than the group predicted in May, also due to the employer mandate delay.

Even with the mandate’s delay, the health law is projected to reduce the deficit, the CBO says, because of lower Medicare spending and other provisions that offset the cost of new coverage. The CBO said May 15 that repealing the law would cost the federal government $109 billion, a figure it didn’t update today.


8 reasons for employers to keep their PPACA guard up

Originally published July 17, 2013 by Dan Cook on

Now that the celebrations have died down over the one-year delay of penalties for employers who don’t meet the PPACA coverage requirements, it’s time to take a close look at what does remain in effect.

The very short answer to the question is that there’s still quite a bit on the books, and that, really, only the teeth have been (temporarily) removed.

Here’s what the national law firm Bryan Cave had to say about which PPACA provisions remain in effect for employers in the year ahead.

1.  Summaries of Benefits and Coverage must be distributed during open enrollment for the 2014 coverage period and must indicate whether the plan provides minimum value, as defined under the PPACA.

2.  Exchange Notices: Employers must distribute PPACA exchange notices to employees by Oct. 1, 2013, and thereafter to new employees upon hire.

3.  Application for Advance Premium Credits: Employers are required to complete a 12-page form entitled, “Application for Health Coverage and Help Paying Costs” when requested by employees who are applying for PPACA advance premium tax credits when purchasing coverage via an exchange.

4.  PPACA fees: Patient-Centered Outcome Research Institute Fees (“PCORI Fees”) must be paid in July 2013 (that’s now!). The first Transitional Reinsurance Fee must be paid on or before Jan. 15, 2015. PCORI is a private non-profit corporation that gathers research-based information to assist patients, practitioners and policy makers in making informed health care decision.

5.  W-2 reporting: Employers must continue to report the aggregate value of health coverage on Forms W-2.

6.  Counting Period for Employer Mandate: Employers that need to determine whether they will be subject to the employer mandate in 2015 (50 or more full-time or full-time equivalent employees in 2014) will need to record employee hours in 2014. It is not yet clear whether a short counting period will be available, which means that employers may be smartest to begin to track hours on a per-employee, monthly basis on Jan. 1.

7.  Benefit Mandates For All Plans: Plan design requirements for all plans continue to apply (e.g., maximum 90-day waiting period, no limits on pre-existing conditions or essential health benefits, expansion of wellness incentives, dependent coverage to age 26).

8.  Benefit Mandates for Non-Grandfathered Plans Only: Plan design requirements for non-grandfathered plans only continue to apply (e.g., preventive care coverage requirements, limits on out-of-pocket maximums, coverage for clinical trial-related services, and provider nondiscrimination, and for small group health plans, limits on annual deductibles).



FAQ: What Workers And Employers Need To Know About The Postponed Employer Mandate

Originally posted by KHN Staff on

Surprising both friends and foes of the health law, the Obama administration on Tuesday announced the delay of a key provision: the requirement that all but the smallest employers offer medical coverage or pay a fine.

Companies with at least 50 workers now have until 2015 to provide coverage if they don’t offer it already, giving them and Washington an extra year to work through the complex details of the legislation. The administration will deliver more guidance next week.

Meanwhile other parts of the law remain on track for implementation next year, according to officials. Here’s what the change means — and doesn’t mean — for workers and employers.

Q. The government has delayed the requirement for large employers to offer health plans. Am I still obligated to obtain coverage next year?

Yes. The requirement that individuals obtain health insurance or pay a penalty — which starts at $95 next year, or 1 percent of household income, whichever is higher, and rises to $695 or 2.5 percent of household income in 2016 — has not changed. But for workers whose employers delay plans to offer coverage, buying a health plan in the subsidized marketplaces known as exchanges might actually be a better deal than what they would have been offered.

Q. My employer already has a health plan. Does this increase chances the company will drop coverage next year?

A. Probably not. The large majority of employers provide insurance even without a government requirement — to recruit and retain good, healthy workers, analysts say. The administration’s decision doesn’t change that.

“For people whose employers already offer coverage, they’re doing it for a reason, and that reason still exists,” said Paul Ginsburg, president of the Center for Studying Health System Change.

Q: If my employer already offers insurance, will this decision mean my coverage will be less generous in 2014?

That’s unlikely. The law requires all employer-sponsored insurance to cover at least 60 percent of medical costs. Coverage that costs more than 9.5 percent of household income is deemed to be unaffordable and those workers may qualify for premium subsidies on the online health marketplaces – putting the employer at risk of incurring a federal penalty. In addition, employers that buy policies rather than self-insure must provide a minimum set of benefits.

Sandy Ageloff, a benefits consultant with Towers Watson, says the administration’s announcement appears to lift the threat of financial penalties for companies that don’t meet these thresholds in 2014, though “those finer points will come out in next week’s guidance” from the administration.  It may be an academic point for most companies already offering insurance, because as Paul Fronstin of the Employee Benefit Research Institute notes, most existing employer policies already meet the law’s 2014 requirements.

Q. What kinds of companies are likely to delay offering insurance to employees?

A. Large employers with lower-wage or variable-hour workers such as retailers, farms, food processors, restaurant chains, casinos and hotels are most likely to delay offering or upgrading coverage, analysts say.

But even well-paying companies such as Wall Street banks might employ uninsured call-center workers whose coverage could be delayed, said Steve Wojcik, vice president of public policy at the National Business Group on Health, an employer group.

“This could be far-reaching into all kinds of companies that you might not think of,” he said.

Q. What does the delay of the employer mandate mean for lower-wage workers?

A. Many low-wage workers already are employed by firms that don’t offer coverage, and, absent a mandate, that may not change next year, says Sabrina Corlette of the Center on Health Insurance Reforms at Georgetown University. Workers who don’t get coverage through their jobs can enroll in an insurance plan through online marketplaces, or exchanges, set to open Oct. 1.

Uninsured people earning less than 400 percent of the federal poverty level, about $45,960 for an individual or $94,200 for a family of four, would be eligible for a sliding scale federal subsidy to help offset the premium cost.

The lowest wage workers – those earning up to about 200 percent of the poverty level –  may actually be better off if their employer does not offer coverage and they go onto the exchange. That’s because the subsidies in that income range are larger, and coverage may actually be more affordable than that offered by an employer, particularly for family policies. Some of those workers may also qualify for Medicaid, particularly in the 23 states and the District of Columbia, which have expanded eligibility for the federal-state program. “This is going to be a boon” for some people, said Ginsburg.

Q. Will Tuesday’s announcement mean that more Americans will be eligible for subsidies to purchase coverage?

The Obama administration said its decisions won’t affect employees’ access to the premium tax credits. In fact, the delay in the employer mandate may result in more low-to-moderate income Americans seeking coverage – many of them eligible for federal assistance. So that could push up the amount the government is expected to pay out in premium and cost-sharing subsidies, which before Tuesday’s announcement wasestimated at about $23 billion next year.

Tracking who is eligible for such tax credits or subsidies may be more complex.  The subsidies are available only to people who meet the income requirements and don’t have job-based coverage that meets minimum affordability and adequacy requirements. With the one-year delay for employers to report such coverage, “it would be impossible for Treasury to determine whether someone had access to affordable health insurance,” said Joseph Antos at the American Enterprise Institute. Proposed rules, expected to be finalized soon, allow people applying for subsidies through the new market to simply attest that they don’t have access to job-based coverage, said Timothy Jost, a law professor at Washington and Lee University, in an analysis on the website of policy journal Health Affairs.

The Obama administration also hopes that employers will voluntarily provide the information, starting next year, according to a post by Mark J. Mazur, assistant secretary for tax policy at Treasury.

KHN reporters Julie Appleby, Mary Agnes Carey, Jay Hancock and Jordan Rau contributed.

PPACA employer mandate delay: What now?

Originally published by Connie Cass, Ricardo Alonso-Zaldivar on

The Obama administration is giving large employers an additional year before it will try to enforce a Patient Protection and Affordable Care Act (PPACA) provision requiring them to offer medical coverage to their workers or pay a fine.

What does the delay mean for workers? And struggling businesses?

Is the delay a significant setback for a law already beset by court challenges, repeal votes and a rush of deadlines for making health insurance available to nearly all Americans next year?

A few questions and answers:

Why the delay?

Businesses said they needed more time.

Obama administration officials say they listened to businesses that complained they needed to figure out how to comply with complicated new rules written since the plan became law. And the delay buys time for the government, as well, to improve and simplify the rules.

PPACA required employers with more than 50 employees working 30 or more hours a week to offer them suitable health coverage or pay a fine. What's changed is the deadline for that requirement, which was to begin in January. The new deadline is Jan. 1, 2015.

Who else benefits from the delay?

  • Democratic candidates. The employer mandate was set to take effect at the start of a congressional election year, intensifying the focus on one of the Republicans' favorite campaign issues. Postponing the requirement should mean fewer ads featuring business owners saying they're drowning under health care mandates.
  • Maybe Republicans, too. They get new ammunition for their argument that the law is an unworkable "train wreck." Voters' complaints and worries about the health law helped the GOP win control of the House in 2010.
  • Some low-income workers. When the employer mandate does take effect, some smallish companies have threatened to lay off workers or cut back their hours to stay under the 50-employee threshold. There's debate about how many workers might be harmed by this.
  • Some job hunters. Once the mandate kicks in, job-seekers may find fewer openings for unskilled workers. That's because some restaurants and other small companies say the mandate will force them to cut back on staff or freeze hiring. The economy is likely to continue improving, which will help offset the impact by increasing demand for workers.

Who loses?

  • Uninsured people who already are confused about the law. The law doesn't change the January 2014 deadline for individuals to get insurance or the tax credits in the law to help them pay for it. But many people don't understand how the law works or when it takes effect, and the delay for the employer mandate may further muddle the issue for many.
  • Some workers. Those whose employers might add insurance coverage to avoid the law's penalties will have to wait a year. But this group is expected to be small. The penalties are designed more to discourage businesses from dropping their existing health plans than to encourage them to start new ones. And these employees can buy their own insurance through the new health care exchanges being set up under the law.

What about me?

Most consumers won't be affected.

The vast majority of Americans already have insurance — even those working at companies that hover around the 50-employee level.

A Kaiser Family Foundation study found that 87 percent of companies that employed from 25 to 49 workers last year offered health coverage, and the percentage goes up for bigger businesses.

Consumers should not be affected by the delay if they already are insured through:

  • A job at a large company that already offers insurance.
  • A job at a small company employing fewer than 50 workers, because such companies are exempt from the rules.
  • Medicaid or Medicare, not affected by the delay.
  • A private insurance policy, also not affected.

Is this delay part of a downward spiral for PPACA implementers?

The delay adds to an appearance of disarray surrounding PPACA.

It comes after other glitches and angry opposition: Lawsuits reaching all the way to the Supreme Court. Protests by religious employers who say covering contraception is against their beliefs. Repeated votes by House Republicans to repeal "Obamacare."

But the postponement doesn't affect the heart of the law — the requirement that individuals get insurance, and the subsidies to help them pay for it. The Obama administration insists the rest of the law will keep rolling along.

Is the rest of the law on track?

Not for everyone.

A majority of the neediest people may remain uninsured. Medicaid changes in the health care law designed to help some 15 million low-income people are being rejected by many states with Republican leaders. That amounts to about half the people who were supposed to be helped by the law.

Last summer, the Supreme Court said states have the right to opt out of the law's Medicaid expansion.

Eighteen states aren't expanding their programs, including populous Texas and Florida. In nine other states, the outcome remains unclear.

Under the law, Medicaid is the only coverage option for people below the poverty line — $11,490 for an individual or $23,550 for a family of four. People this poor cannot get subsidized private coverage in the new health insurance markets.

The poor will be exempt from penalties for being uninsured, but they also won't get help with their health care.

Medicaid already covers more than 60 million people, including many elderly nursing home residents, severely disabled people of any age and many low-income children and their mothers.

PPACA Critics Pounce On Employer Mandate Delay

Originally published by Elizabeth D. Festa on

The Obama administration announcement July 2 that it was going to delay implementation of the employer mandate of the Affordable Care Act (ACA) until 2015 has thrown into a tailspin expectations of the act’s requirements and revised expectations for other provisions of the Act.

Conservative politicians pounced.

House Energy and Commerce Committee Chairman Fred Upton (R-MI) stated that “the Administration's sudden turnabout is a clear admission that its signature law is bad for business and bad for jobs. This law will never be ready for prime time and sadly, the administration's acknowledgement that it still needs yet another year clearly disrupts everyone's ability to determine what is best for them and their business."

Regulators seemed a bit worried but were quick to come up with solutions--if they had one.

The California Department of Insurance pointed people toward the state-operated health insurance exchange, expected to go into operation Jan. 1, 2014.

“Employees whose employers do not provide health insurance will be able to purchase health insurance in California’s new health benefit exchange.” stated Commissioner Dave Jones.  He noted that many will be eligible for a premium subsidy if they make less than 400 percent of the federal poverty level, which in California is about $94,000 for a family of four.

Jones also urged the Administration to “make sure that this provision can be implemented in 2015.”

Brokers say this delay will have tremendous consequences for the private marketplace.

“No doubt this is a huge capitulation by the Administration, consistent with getting ahead of the potential politics of a messy implementation,” stated Joel Wood of the Council of Insurance Agents & Brokers.

“Our members have mixed emotions about this. They’ve invested an astonishing amount of resources in running the pay-or-play scenarios for their clients and preparing for January.  Those who haven’t prepared their clients will revel in the news, and conservatives will sense blood in the water. On the other hand, the mandate drives up the cost of labor; perhaps this is a modest mitigation,” Wood stated.

Health insurance representatives shook their collective heads, and wondered if another shoe would drop in the ACA implementation.

On June 19, the Government Accountability Office (GAO) issued a report entitled "Status of CMS Efforts to Establish Federally Facilitated Health Insurance Exchanges.

"The detailed 50-page report raises a red flag about whether the health insurance exchanges established by the Patient Protection and Affordable Care Act (PPACA) will be open for business on October 1, as the Act contemplates," stated a July 2  email alert from the American Health Lawyers Association.

The Report notes that many states, with both future federal partnership and state-operated exchanges, have not demonstrated that they will be able to carry out the necessary functions to run the exchanges or are behind on the timetables required to do so in a timely manner.

“Because the Act effectively requires the federal government to undertake whatever exchange functions states fail to carry out, the precise scope of what the federal government will need to accomplish in order to ensure that the exchanges are up and running is not yet clear and likely will remain something of a moving target until (and perhaps even after) the exchanges go live,” the AHLA stated.

For its part, the Administration is perhaps hearing from employee benefit groups that the paperwork is too complex and employers are not ready.

It said that said the delay is designed to meet two goals.

“First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law,” said Mark J. Mazur, assistant secretary for tax policy at the U.S. Department of the Treasury, who first unveiled the new from he administration on a blog post on the Treasury site.

The Treasury's IRS would levy the tax penalty for companies that did not comply with the mandate, when it goes into effect. IRS officials have suggested that employers and their advisors should avoid using complicated strategies to try to minimize the number of workers who are eligible for group health benefits under PPACA. It did so back in late December in the preamble to draft regulations for implementing the "shared responsibility" parts of PPACA.

PPACA calls for employers with more than 50 full-time equivalent employees to provide a minimum level of health benefits for year-round employees who work more than 30 hours per week. Workers who do not offer the minimum level of coverage, or fail to ensure that the coverage meets affordability requirements, are supposed to pay penalties.

Mazur pointed to the Administration’s work to reduce and simplify its 21-page application for health insurance to three pages as an example of the effort it is giving the employer mandate reporting requirements.

“Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees,” Mazur wrote.

Within the next week, the Administration is expected to publish formal guidance on its decision.

Official Press Release from DOT on Employer Mandate Delay

Originally posted by Mark J. Mazur on

Over the past several months, the Administration has been engaging in a dialogue with businesses - many of which already provide health coverage for their workers - about the new employer and insurer reporting requirements under the Affordable Care Act (ACA). We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action.

The Administration is announcing that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees. Within the next week, we will publish formal guidance describing this transition. Just like the Administration’s effort to turn the initial 21-page application for health insurance into a three-page application, we are working hard to adapt and to be flexible about reporting requirements as we implement the law.

Here is some additional detail. The ACA includes information reporting (under section 6055) by insurers, self-insuring employers, and other parties that provide health coverage. It also requires information reporting (under section 6056) by certain employers with respect to the health coverage offered to their full-time employees. We expect to publish proposed rules implementing these provisions this summer, after a dialogue with stakeholders - including those responsible employers that already provide their full-time work force with coverage far exceeding the minimum employer shared responsibility requirements - in an effort to minimize the reporting, consistent with effective implementation of the law.

Once these rules have been issued, the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.

We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.

During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage. Also, our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA).

Mark J. Mazur is the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury.