Employer mandate delayed; businesses urged to stay informedcomment (0)
July 18, 2013
By Jennifer Davis Rash
Business owners across the nation breathed a collective sigh of relief July 2 when the Obama Administration announced it postponed the health care reform employer mandate until 2015.
Originally set for Jan. 1, 2014, the deadline would have meant tax penalties for any employer with 50 or more full-time equivalent employees not offering health insurance coverage to their full-time employees. (See Health Care in America installment 2 in the July 4 issue for the formula to determine full-time equivalent employees.)
Employers now have another year to prepare for the mandate and corresponding penalty, but experts warn decision makers of the temptation to procrastinate.
The new deadline date “is designed to meet two goals,” said Mark J. Mazur, assistant secretary for tax policy at the U.S. Department of the Treasury. “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.”
But Birmingham-area insurance experts speaking on a Birmingham Business Journal panel about health care reform July 11 noted the postponed mandate will likely result in many employers pushing the decisions aside until next summer.
Bob Ellerbrook, associate for Balch and Bingham law firm, said, “A postponed deadline postpones action and urgency. We need a deadline or we are not going to do it.”
Even if an employer already provides health insurance, the delay will still have its benefits — if employers don’t procrastinate, said Gene Ramsay, president of Birmingham Association of Health Underwriters.
From reporting and notification requirements to making sure the plan a company offers is affordable, there are plenty of potential compliance pitfalls for businesses.
Ramsay said the extra preparation reduces the chances of employers and insurance providers facing legal ramifications because of noncompliance.
“They’re going to say, ‘I’m not going to have a problem because I’ve been doing it right for a year,’” he said.
Michael Patterson, vice president for legal services at Blue Cross and Blue Shield of Alabama, added, “This is a good time for employers to take time to go through the three-part test. It is more time to work through the system.”
William Horton of Johnston Barton Proctor and Rose LLP said, “Employers who don’t take this time and decide how they are going to respond are wasting a gift from the government.”
But Ramsay noted that many business owners saw the delay coming and anticipate more changes. “This could be the first domino,” he said, noting a July 8 Washington Post article outlining three other health care reform delays that didn’t receive as much attention as the employer mandate delay.
In that article, writer Sarah Kliff explained that the 606-page final regulation on some of the health care law’s key provisions was released July 5. Included in the document are three other “delays,” according to the article.
While Gov. Robert Bentley joined 25 other governors who chose not to run a health insurance marketplace in Alabama, the other states are planning to do so.
Of those state-run marketplaces, consumers’ claims that they do not receive employer-provided health insurance do not have to be verified until 2015, Kliff reported.
“The health law relies partially on the federal government knowing who receives employer-sponsored insurance and who does not. Anyone who receives an affordable offer of health insurance from their employer (less than 9.5 percent of their income) does not qualify for a federal tax credit,” Kliff wrote in the Post article.
“Initially the federal government had told the 17 state-based marketplaces that it could handle the heavy lifting of monitoring claims by applicants that did not receive employer-sponsored insurance.
“But after encountering ‘legislative and operational barriers,’ the federal government has decided it does not have the manpower. Moreover it will not require the states running their own marketplaces to do this check until 2015.”
A second delay is a scale back in oversight of what applicants say they earn, Kliff reported.
“Knowing an applicant’s salary is crucial for the Affordable Care Act: Their income determines what kind of tax subsidy they receive, if they get any assistance at all,” she wrote in the article.
Instead of checking every individual who reports an income 10 percent lower than they earned the previous year, the federal government will only check “a statistically significant number of these people with large income discrepancies, rather than the entire group,” the article said.
The third delay deals with electronic notices for Medicaid. They will not be required until 2015, Kliff reported, noting the delay is to provide time to get technology needs in place.
Will there be other delays? Experts say it is possible.
Horton said, “The government has done what a lot of employers have done. They (the government) sort of realized, ‘Gee, there’s a lot of stuff we have to do.’
“I don’t see how there can’t be more delays.”
(Birmingham Business Journal — www.bizjournals.com — contributed)