The Affordable Care Act requires that large employers, defined as those employers who employ on average 50 or more full-time equivalent employees, must offer their full-time employees health coverage that is both affordable and adequate, or risk paying a penalty.
On July 2, the Obama Administration announced it would hold off implementing the employer penalty provisions until 2015. The Administration cited the complexity of the requirements and acknowledged the burdensome nature of the reporting requirements on businesses, suggesting it would work with employers to simplify the requirements.
The employer-mandate provision delay comes on the heels of the Administration’s announcement in April 2013 that it was delaying full implementation of the Small Business Health Option Program.
Additionally, on July 5, 2013, the Department of Health and Human Services released a 606-page document final rule announcing how Medicaid expansion, Children’s Health Insurance Program eligibility notices and health insurance marketplaces will operate. Yet, the final rule cited several modifications and delays.
First, state-run exchanges will not have to start verifying employer-insurance until 2015. Under the ACA, if an employee is offered affordable and adequate coverage from his/her employer, then the employee is ineligible for a federal tax credit. HHS has announced that due to “legislative and operational barriers,” it will not require employers to report employment information directly to state-run exchanges or require state-run exchanges to obtain employer data from the Internal Revenue Service to document employee eligibility. Instead, for plan years before January 1, 2015, the Exchange “may accept the applicant’s attestation… without further verification.” The regulations note that HHS is currently developing model eligibility determination notices and other model notices to alleviate the burden on public exchanges to develop such notices.
Second, the federal government has loosened the income reporting requirement for all public exchanges. The ACA provides that individuals may be eligible for premium tax credits and cost sharing reductions to help them purchase coverage on a public exchange if the individual makes less than 400 percent of the federal poverty level. HHS’s final regulations provide “for the first year of operations” exchanges have “expanded discretion to accept an attestation of projected annual household income without further verification.” In 2014, attestations must only be subject to heightened scrutiny when there is a statistically significant discrepancy between the value attested and the individual’s tax return from the prior year and there is no reasonable explanation given (e.g., individual lost job) for the discrepancy.
Finally, Medicaid agencies may delay issuing electronic notices for the 2014 plan year. The ACA requires that state Medicaid agencies issue individuals electronic notice of their eligibility for certain premium tax credits and premium tax subsidies. The regulations acknowledge that “states are at different places in the development of their eligibility and enrollment systems,” and thus, have extended the requirement that individuals receive electronic notices until January 1, 2015.
Opponents of healthcare reform may well point to this series of delays and modifications as further evidence that the Affordable Care Act is inherently flawed and unworkable. On the other hand, advocates will contend that the delays simply indicate that the Obama recognizes the complexity of the Affordable Care Act and is willing to modify benchmarks to address the administrative burdens and time constraints that employers and regulatory officials face. At a minimum, the delays signal that government officials and employers need additional time to understand, prepare for and comply with the law.
Katherine Georger is an attorney in the Boise office of Holland & Hart LLP, practicing in the areas of health care, employment and business law. Georger can be contacted at 208.342.5000 or by email at [email protected] For more information about health law topics, including health care reform, and for a schedule of upcoming events, please visit our blog at hhhealthlawblog.com.