Industry insiders quickly found holes in the Affordable Care Act employer mandate delay announced July 2 by the Obama administration and U.S. Department of Treasury.

The biggest hole so far, say brokers and media alike, is self-reporting for subsidies.

Thom Mangan, CEO of United Benefit Advisers and EBA advisory board member, says he had one main question for the Treasury after the announcement: What about the people who were going to potentially be eligible for subsidies if their employer was not offering "affordable" coverage, as the ACA stipulates?

That answer came three days later from the Obama administration.

"It's crazy," Mangan says. "It's self-reporting. ... Employers don't have a mandate to go and report if a person is eligible for subsidy. Some people will just apply and they may be at 400% of poverty level, they may be 50%, whatever they report is whatever goes through."


Subsidy confusion

The announcement, which Mangan says was expected from the Treasury, came in a 606-page document that not only answered his aforementioned question but made clear that all subsidy verification would rely on self-reporting until 2015.

Mangan says he predicts there are going to be "plenty" of people who are not qualified for subsidies getting them anyway.

"We're in for an awful 2014, 2015 for the IRS trying to figure this out," he says.

A Mercer statement on the subsidy loophole nodded to even more potential confusion. "Public exchanges, which are slated to be operational in 2014, may still reach out to employers to verify applicant eligibility for health insurance," the statement said.

"It will be state by state, and it's just going to be part of your tax return," Mangan says about the possibility of some states pursuing verification. "I just moved to Illinois and it was pretty simple in my W2 paperwork."

With some states verifying and others potentially not, the budget could get tricky.

Also contributing to new budgeting problems for the ACA is the missing funds that would have accrued from employer penalties for not offering health care in 2014.

Despite the varying sources that say between 94% and 98% of employers already offer coverage, Mangan says there were definitely some businesses planning to pay the fine and not "play."

He explains: "There were still some employers in the high part-time or low-wage industries that never provided benefits. They have 300% annual turnover in the fast food industry ... that was more of a logistical nightmare than providing health insurance."

In fact, the Congressional Budget Office had previously estimated that the penalties from employers would add up to approximately $10 billion in 2014. "I'd say the CBO had it spot-on in terms of what we won't collect in the end," Mangan says.

Meanwhile, as the details are sorted out, business groups and insurance brokers and agents immediately celebrated the extra time allowed for employer shared responsibility reporting. Some also questioned whether other delays are on the horizon as well.

Brian Kalish contributed to this report.

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