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ARC: WHAT COMPANIES NEED TO KNOW AS THEY ASSESS MEDICAL COVERAGE OPTIONS

Employers enthusiastic about delay of health care reform mandate

Health Care Reform Mandate

Employers are jubilant over the U.S. Treasury Department's surprise announcement last week to delay by one year until 2015 a key provision of the health care reform law that will require them to offer coverage or pay a stiff fine.

But employers still will have to comply with other provisions of the Patient Protection and Affordable Care Act unless the Treasury Department expands its delay.

In both a surprising and unconventional — if not unprecedented — way of communicating a government change in policy, Mark Mazur, Treasury's assistant secretary for tax policy, used a blog post to explain and announce the delay in the ACA provision that requires employers with at least 50 employees to offer qualified coverage to at least 95% of their full-time employees or pay a $2,000 fine per full-time employee.

In explaining the delay, Mr. Mazur referred to a health care reform law provision that will require employers to file health care plan enrollment information for all their employees with the federal government. So far, regulators have not provided any guidance on how employers are to comply with this massive requirement that will give regulators information to determine which employers will owe the government money and how much they will owe.

By delaying the reporting and coverage mandates, the government will have more time “to consider ways to simplify the new reporting requirement consistent with the law,” Mr. Mazur wrote, adding that additional guidance will be provided next week.

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With the delay in reporting coverage information, Mr. Mazur said, it would have been “impractical” to determine which employers owed money for not extending coverage.

“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,” Mr. Mazur wrote.

Business groups are ecstatic over the delay in the reporting retirements, noting the monumental and costly compliance effort they would have faced had regulators produced rules later this year.

“We are relieved that employers did not have to face onerous reporting requirements,” said Gretchen Young, senior vice president of health policy for the ERISA Industry Committee in Washington.

“This a is big relief for employers. It takes months to do programming changes — and every month without guidance” would have boosted employers' compliance costs, said Helen Darling, president of the National Business Group on Health in Washington.

“The reality is that reporting would be a monumental effort and we lacked the necessary guidance,” added Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

Still, the delay is limited. It will have no impact on other provisions that kick in next year, such as the ban on waiting periods of longer than 90 days before coverage for new employees begins; payment of fees to fund a health care reform law program that will partially reimburse insurers for providing coverage to high-cost individuals; and the end of government temporary waivers that have allowed employers to offer mini-med plans, a skimpy type of health care plan that would fail the reform's law coverage requirements.

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Still, questions remain, not the least of which is whether regulators have the authority to delay a requirement that is set by law.

“It is possible that pro-participant groups could challenge this,” said Tracy Watts, a partner with Mercer L.L.C. in Washington.

There are other issues as well. Lower- and middle-income employees whose employers do not offer health care plans in 2014 will still be eligible for subsidized coverage in the public insurance exchanges.

Then, in 2015, their employers may decide to offer limited coverage that will exempt them from the massive $2,000 per-employee penalty, but potentially not from another reform law penalty that applies when coverage does not pass a minimum value test.

That penalty of $3,000 per affected employee only applies when the employee is eligible for a federal premium subsidy and uses it to buy coverage in an exchange.

Those individuals — just due to inertia — might stay with an exchange rather than opting into the employer plan, exposing employers to assessments they might not have faced if they had offered coverage starting in 2014 and affected employees had chosen the employer plan and remained in the plan.

“There are some tricky issues for employers to consider,” said Michael Thompson, a principal, with PricewaterhouseCoopers L.L.P. in New York.

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