The employee benefit industry is feeling a bit of déjà vu with the latest Affordable Care Act delay.
The Internal Revenue Service on Monday issued final guidance saying that employers with fewer than 100 employees wont have to provide health insurance coverage until Jan. 1, 2016. So far, responses from the employer industry are grateful and respectful of the latest postponement in a string of many by the Obama administration.
The rule recognizes the variations among employers, industries and employment situations and takes a flexible, common sense approach, says Steve Wojcik, vice president of public policy at the National Business Group on Health, which represents larger employers on health policy issues. We appreciate the flexibility that the rule gives employers of all sizes as we implement the employer mandate.
Meanwhile, the National Association of Health Underwriters, representing thousands of health insurance agents and brokers, called this second employer mandate delay transition relief, in a statement released on its Facebook page.
Previously, on July 2, 2013, the Obama administration delayed the need for all employers with 50 or more employees to provide health insurance coverage until Jan. 1, 2015.
We were anticipating [the guidance] and they [IRS] indicated there is more guidance to come out in terms of the [employer] reporting rules, which go hand-in-hand with these rules, says Paul Hamburger, a DC-based partner and co-head of Proskauers Employee Benefits, Executive Compensation & ERISA Litigation Practice Center. So well have a complete picture of what well need to do for 2015 and 2016 once those final employer reporting requirements come out, which they say in the fact sheet will be issued shortly.
And for larger employers those with 100 or more full-time employees the guidance offers a break for 2015 in that you wont be subject to the worst of the penalties as long as you offer coverage to at least 70% of your full-time employees, says Hamburger. The normal rule is 95% and thats the rule that will apply in 2016.
Not everyone pleased
For the benefit advisers who have worked to keep plan sponsor clients on track with all of the updates and delays, at least one is growing impatient with the stop-and-start nature of this portion of ACA compliance. The government seems to have no regard for the lengths that employers have been going to in order to get in compliance. With the threat of more DOL audits, and penalties that will be assessed, our groups in this space have spent countless hours getting their compliance house in order, says Lauren Yurick, a partner and benefit consultant at Benefit Resource Group in Reno, Nev. That often involves a domino effect on their other workforce initiatives and this disruption seems to be given no consideration with these new rulings.
She adds: "Had President Obama taken prudent steps first, instead of shooting first and aiming later, most of this could have been avoided."
And Bill Sweetnam, a lawyer whose clients are benefits advisers, also expects this regulation to cause more trouble for this niche of the industry. "With over 200 pages of regulations and numerous effective date and phase in periods, advisers will have a lot of information to digest," says the co-chair of Groom Law Group's Policy and Legislation Group in D.C. "In addition, there is sure to be further guidance that plan advisors will have to understand."
Meanwhile, Craig Lack, CEO of ENERGI, is taking the delay more in stride. "We all need to remember that change is a process, not an event," says the San Juan Capistrano, Calif.-based employee benefit specialist. "It will take three years to communicate, and be heard."
And others are too focused on the future to worry about a few delays in the present. "Long term, employers are focused on the excise tax that goes into effect in 2018. According to a survey conducted by Mercer prior to open enrollment for 2014, almost a third of employers said they were already making changes to health care benefits in 2014 in anticipation of the excise tax in 2018," says Tracy Watts, a senior partner at consulting firm Mercer. "In all of our health care reform surveys since the law was passed in 2010, the excise tax has consistently been the number one concern for employers."
Additional reporting by Kathleen Koster, Andrea Davis and Elizabeth Galentine.
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