On February 12, 2014, the Obama Administration released the final regulation for the Affordable Care Act’s (ACA) employer-shared healthcare insurance responsibility provisions. This regulation again delays the employer mandate and changes the healthcare reform law without Congressional approval. But it also contains a provision, which truly demonstrates how pernicious ACA, better known as ObamaCare, is to employers and their ability to make decisions on how to run their company. It demonstrates how powerful the federal government has become.
As you may recall, the healthcare reform law required all employers with 50 or more full-time equivalent employees to provide ObamaCare mandated insurance benefits or pay a fine starting January 1, 2014. (Full-time work is now considered 30 hours per week.) The fine can vary depending on whether the employer doesn’t provide insurance at all, provides insurance deemed having minimum value by ObamaCare (a plan that covers less than 60 percent of benefit costs) or if at least one employee receives a premium tax credit that helps pay for coverage in an ObamaCare exchange. This can happen if the employer provides insurance ObamaCare has deemed too expensive (9.5 percent or more of the employee’s annual income) and the employee purchases insurance via an ObamaCare exchange to take advantage of the taxpayer-provided subsidies. The employer will pay the government the lesser of $2000 for each employee that does not receive health insurance or $3000 for each employee receiving a premium credit.
The just-released regulation changes the date for complying with the mandate until 2015 or 2016 depending on the size of the employer. Listed below are the three provisions concerning employer size and when the mandate takes affect:
• Small Businesses with fewer than 50 employees (about 96% of all employers): Under the Affordable Care Act, companies that have fewer than 50 employees are not required to provide coverage or fill out any forms in 2015, or in any year, under the Affordable Care Act. [Note: This has always been the case within the law.]
• Larger employers with 100 or more employees (about 2% of employers): The overwhelming majority of these companies with 100 or more employees already offer quality coverage. Today’s rules phase in the percentage of full-time workers that employers need to offer coverage to from 70 percent in 2015 to 95 percent in 2016 and beyond. Employers in this category that do not meet these standards will make an employer responsibility payment for 2015.
• Employers with 50 to 99 employees (about 2% of employers): Companies with 50-99 employees that do not yet provide quality, affordable health insurance to their full-time workers will report on their workers and coverage in 2015, but have until 2016 before any employer responsibility payments could apply.
Because of the delay, the Obama Administration has created a transition period for employers. During this transition time, employers are responsible for figuring out their total number of employees and the number of hours they work. Depending on the number of employees the company has, the employer will not have to make responsibility payments until 2015 or 2016.
The cost of ObamaCare’s expensive mandates has employers worried and it’s doubtful this delay will elevate fears. Last year there were dozens of news reports on numerous employers making the decision to make most, if not all, of their employees part-time, thus avoiding the ObamaCare mandate. Other companies were changing their insurance policies to not include spouses; laying-off or not hiring workers; or eliminating health insurance coverage entirely. Investor’s Business Daily has a “list of job actions with strong proof that ObamaCare’s employer mandate is behind cuts to work hours or staffing levels.”
One of the more insidious aspects that came out of the February 12 final regulation is a requirement that in order for employers with 50 to 99 employees to receive “transition relief” to comply with ObamaCare, they must certify under penalty of perjury to the federal government that they have not reduced their workforce force or eliminated or materially reduced health coverage if any insurance was offered as of Feb. 9, 2014. This requirement can be found in IRS’s “Question and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act” document, question number 34.
Fox News, CNBC, Bloomberg News, and the Washington Times were a few of the news outlets that found the certification requirement newsworthy. CNBC wrote that Obama Administration “officials said that any business claiming they are eligible for the new one-year delay because they have fewer than 100 workers must certify, under penalty of perjury, that it had not reduced its workforce merely to qualify for that exemption.”
Here is what Fox said:
Is the latest delay of ObamaCare regulations politically motivated? Consider what administration officials announcing the new exemption for medium-sized employers had to say about firms that might fire workers to get under the threshold and avoid hugely expensive new requirements of the law. Obama officials made clear in a press briefing that firms would not be allowed to lay off workers to get into the preferred class of those businesses with 50 to 99 employees. How will the feds know what employers were thinking when hiring and firing? Simple. Firms will be required to certify to the IRS – under penalty of perjury – that ObamaCare was not a motivating factor in their staffing decisions. To avoid ObamaCare costs you must swear that you are not trying to avoid ObamaCare costs. You can duck the law, but only if you promise not to say so.
What could be some of the reasons for the certification? There could be several according to several healthcare policy wonks.
It’s been predicted that millions of cancellations of health insurance policies in the small group and individual market will come to fruition throughout 2014 because they do not comply with ObamaCare’s pricy mandatory essential benefit package. (For example, single men and menopausal women are required to have coverage for maternity and pediatric care.) Many cancellations will occur in October, just a month before the 2014 mid-term elections. Could the Obama Administration be trying to stem the flow of cancellations so soon before an election?
Some argue that even if businesses certify falsely that the changes they made to their workforce numbers or insurance coverage had nothing to do with the ObamaCare mandates in order to get transition relief, the IRS will not come after them. What the administration really wants is to be able to do is hold up thousands of certifications just before the elections and declare any cancelled insurance policies or lay-offs were not due to ObamaCare’s mandates – the causes were for “bona fide business reasons.”
But others express concern that IRS officials could go after a few companies, based on what employees may report to them or what they see in the news and make examples of them, thus forcing other employers to not drop insurance coverage or lay-off workers just before the election. After all, this is the administration in which an EPA official, Region VI Administrator Al Armendariz, said one way to keep oil and gas companies obedient is to do what the Romans did when they first entered a town. He said the Romans would, “find the first five guys they saw and they’d crucify them…then, you know, that town was really easy to manage for the next few years…it’s a deterrent factor.”
To add more to the mix, Robert Laszewski, a health insurance specialist, said in his Health Care Policy and Marketplace Review blog that, “For employers with more than 50 workers this is a delay not a fix. Employers will only now up the pressure to change the law completely, knowing they have the administration on the political run over these issues. And, small employers will still have to comply with the very costly minimum benefit mandates — really the biggest complaint they have had. Just exactly what is the Obama administration accomplishing with a delay?”
It’s hard to know exactly but what is known is thousands of employers have some tough decisions ahead of them and this is only the beginning on how to live with the ObamaCare python.