Employer mandate and subsidy eligibility verification shelved for 2014.
While many Americans were heading out of town or firing up the grill for the Fourth of July, the Obama Administration made two major delay announcements regarding the Patient Protection and Affordable Care Act (PPACA).
As was widely reported by the media, the biggest splash was made by the announcement Friday afternoon, that the enforcement of the employer mandate, scheduled to take effect Jan.1, 2014, will be delayed for one year.
In addition, a separate delay that received less coverage was contained in a lengthy regulation also released on Friday that loosens the verification of individuals’ eligibility to receive government subsidies to purchase private insurance through the new health insurance exchanges for 2014.
On Tuesday of this week, the Administration released additional guidance to supplement the initial announcement of the one-year employer mandate delay. According to the federal officials, the decision was made both due to technical difficulties in implementation and to give employers more time to comply with this particularly complex portion of the law.
The Administration has said that official regulations on the matter will be published later this summer.
The Administration framed the decision as a delay in the enforcement of the mandate, its reporting requirements and subsequent tax assessments for “large” employers who do not provide adequate or affordable health care. In other words, the employer mandate is still technically on the books, but there is no penalty for noncompliance for 2014 only.
The employer mandate was designed by the authors of the PPACA both as a backstop to the individual mandate and to prevent the erosion of the employer-based health care system. The mandate requires employers with 50 or more employees to provide coverage of at least a 60% actuarial value (equal to a bronze level plan on the new exchanges) and for coverage to be affordable (premiums no greater than 9.5% of an employee’s income).
Since the individual mandate will still be in place on Jan. 1, 2014, this move by the Administration is seen by some observers as not significantly impacting implementation of the broader law. Furthermore, many larger employers will likely be grateful for the additional time for compliance.
On the other hand, the delay could boost initial enrollment through the exchanges as many larger employers already interested in moving in this direction will not be assessed a penalty for 2014. Along these lines, many experts worry that this move by the Administration could also undermine the employer-based system of health care. This is of particular concern to independent insurance agents and brokers.
The only certainty is that this is, at least in the short-term, a political win for opponents of the law.
Exchange Subsidy Eligibility
Another PPACA delay was announced Friday, which says that the federal government will not be verifying individuals’ eligibility to receive subsidies through the new health insurance exchanges for 2014.
These subsidies will be available to individuals earning between 100% and 400% of the federal poverty level in order to assist with the purchase of private health insurance through the exchanges. The Administration has said it will be conducting random checks to verify income status, but essentially will almost entirely rely on an “honor” system and self-reporting in all 50 states for the first year the exchanges are open.
Additionally, the regulations spelled out a further delay in that the 17 state-run marketplaces will not be required to verify that a consumer does not receive adequate health insurance from their employer. This will further affect how many individuals receive subsidies, since only individuals who do not have access to adequate coverage through their employer may enroll in plans through the exchanges and potentially receive subsidies.
Numerous critics have said these moves by the Administration will make the program ripe for fraud and abuse and question the power of the Administration to make these changes without legislative approval. The Administration has countered that these are non-essential parts of the law and within its discretion as the law is implemented.
Regardless, these latest delays prove that implementation of the PPACA is hitting some major speed bumps and leave most wondering if this is only the tip of the iceberg.
To answer any questions you may have about Kendall business insurance and healthcare for your business, give Prestige Insurance Group, Inc. a call at 305-969-8776.
Ryan Young is Big “I” senior director of federal government affairs.