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From Health Law Daily, July 17, 2013

House prepares to vote on legislation to make health reform employer mandate delay official

By Paul Clark

As of 3:15 PM EDT on Wednesday July 17, the House of Representatives was debating but had not yet voted on two pieces of legislation that would officially codify the delay in the employer and individual mandate included in the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). The Obama Administration had announced on July 2 that it was delaying until 2015 implementation of PPACA provisions relating to annual information reporting required by large employers concerning the health insurance coverage it was providing its employees. Assessment of penalties that employers would have to pay if they did not provide health insurance coverage also was delayed by one year.

The announcement, which came from the Treasury Department, noted that the Administration had “heard concerns about the complexity of the requirements and the need for more time to implement them effectively.” On July 9th, the Internal Revenue Service published Notice 2013-45, formal guidance describing what the administration refers to as “transition relief.”

Rep. Tim Griffin (R-Ark.) one of the sponsors of the “Authority for Mandate Delay Act” (HR 2667), said “The White House may believe it can unilaterally delay implementation of Obamacare’s employer mandate, but only Congress can change the law.”

Also on Wednesday, a senior advisor in the Treasury Department testified before the House Ways and Means Subcommittee on Health on the rationale behind transition relief, and provided historical precedents for an administrative change in a law passed by Congress.

House legislation. HR 2667 would –

  • amend PPACA sec. 1513(d), which details the penalties that large employers face if they do not offer health insurance coverage to their employees, by changing the effective date from months beginning after December 31, 2013, to months beginning after December 31, 2014;
  • amend PPACA sec. 1514(d), relating to the reports that large employers must make to the IRS regarding the insurance coverage they are providing to their employees, by changing the effective date from months beginning after December 31, 2013, to months beginning after December 31, 2014;
  • amend PPACA sec. 1502(e), which requires insurance companies who provide health insurance through the new Exchanges in each state to report to make a report to the IRS on each person they have covered, by delaying the effective date to years after 2013.

The “Fairness for American Families Act” (HR 2668) would amend sec. 5000A of the Internal Revenue Code, as amended by PPACA, to delay until 2015 the effective date of the mandate for individuals to carry health insurance, or pay a penalty.

White House response. The Obama administration released a Statement of Administration Policy on July 16 strongly opposing both bills. According to the statement, “H.R. 2667 is unnecessary, and H.R. 2668 would raise health insurance premiums and increase the number of uninsured Americans.” President Obama would veto both bills if they passed both the House and the Senate.

The Congressional Budget Office said that while HR 2667 would not affect direct spending or revenues, it is preparing a more in-depth analysis on the impact of the delay of the employer mandate and other recently released final rules on federal spending and revenues.

Transition relief. Treasury Department senior advisor J. Mark Iwry told the Health subcommittee that “employers and their representatives requested transition relief for 2014 because of concerns about the difficulty or cost of complying with the reporting requirements, the desire that reporting be simplified and the lead times necessary to adapt information gathering and reporting systems and implement the reporting requirements effectively.” The additional year of implementation, Iwry said, allows for consideration of ways to simplify the new reporting requirements. It also will employers additional time to adapt health coverage and reporting systems.

Since the mandatory reporting requirements are extended for one year, Iwry said, employers will not have sufficient information to determine if any of their employees have received a premium tax credit to purchase insurance through one of the new health insurance Exchanges. “As a result,” Iwry said, “the 2014 transition relief for employer reporting will make it impractical to determine which employers owe assessable payments for 2014. Accordingly, no such payments will be assessed for 2014.”

Iwry also said that “Notice 2013-45 is an exercise of the Treasury Department’s longstanding administrative authority under section 7805(a) of the Internal Revenue Code.” Iwry further emphasized that the transition relief does not affect individual eligibility for premium tax credits to purchase insurance through the new Exchanges, nor does it affect the effective date of the individual responsibility provisions, the insurance market reforms, and various revenue provisions of the health reform law.

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