On Tuesday, the House Subcommittee on Health, Employment, Labor, and Pensions, and the Subcommittee on Workforce Protections, held a joint hearing to discuss how the Obama administration’s one-year delay of the Patient Protection and Affordable Care Act’s (ACA) employer mandate will affect the workplace.
On July 2, 2013, the Treasury Department announced that it would postpone until 2015 the employer responsibility provisions and accompanying employer and insurer reporting requirements. Section 4980H of the ACA – known as the pay-or-play mandate – requires employers with 50 or more full-time and full-time equivalent employees to either offer employees and their dependents health coverage that meets affordability and “minimum value” requirements, or pay a penalty. Section 6055 of the ACA requires health insurance issuers, self-insuring employers, government agencies, and other providers of health coverage to submit annual information reporting, while section 6056 requires applicable large employers to submit annual information reporting relating to the health insurance that the employer does or does not offer its full-time employees. These provisions were set to take effect as of January 1, 2014. The newly-announced grace period pushes back these obligations until January 1, 2015.
In his opening statement, Rep. Phil Roe (R-TN), Chairman of the Subcommittee on Health, Employment, Labor, and Pensions, referred to this delay as “a temporary reprieve from an onerous mandate.” Among other questions he posed was if the President has “the authority to unilaterally delay enforcement of the law?” and “who was involved in this decision and when it was ultimately made?” Last week, the House passed a bill to delay the employer mandate until 2015 as well as another bill the delay the individual mandate by one-year.
Grace-Marie Turner, president of a non-profit research organization focused on market-based health reform, testified that the decision to delay the reporting requirements for the mandate “creates new questions and concerns for business owners and workers.” Turner stated that because of the delay, “employers are more confused than ever about what their responsibilities and liabilities are during this period of ‘transition relief’ from the reporting requirements. Regulations explaining the details of this announcement are not expected until later this summer, adding further to the uncertainty in their attempts to comply with the law.”
Turner claimed that the one-year delay will not change that employers have already scaled-back on hiring. She referred to “countless news reports of companies that are being forced to cut hours for their workers to fit within the constraints of the ACA.” Turner also criticized the ACA’s definition of “full-time” as 30 hours per week instead of the customary 40. “Because there is a look-back period, many employers already have begun scaling back employee hours. And many of them are cutting workers back to 25 hours a week to provide a cushion in case employees’ shifts run over.” Finally, Turner noted even labor unions are expressing dissatisfaction with many of the law’s provisions.
Douglas Holtz-Eakin, President of the American Action Forum, echoed many of these points, stating the healthcare law will contribute to slower job growth, lead to a greater reliance on a part-time workforce, and change how employees are compensated. He also discussed the regulatory burden that the ACA has placed on businesses.
Jamie Richardson, speaking on behalf of the National Restaurant Association, similarly criticized the ACA’s definition of full-time employee and claimed that “it is the mounting uncertainty surrounding the health care law that brought us to a standstill.”
Richardson explained that the ACA creates special compliance challenges for restaurant and food service industry employers due to the “unique characteristics” of this industry. In his testimony, he stated that “the definition of ‘full-time employee’ does not reflect our workforce needs or our employees’ desire for flexible work schedules.” According to Richardson, “It’s much more difficult for employers to determine how the law impacts them and what they must do to comply. Many of the determinations employers must make to figure out how the law impacts them – for example the applicable large employer calculation – are much more complicated for restaurants than for other businesses who have more stable workforces with less turnover.”
However, Ron Pollack, Executive Director of Families USA, testified that he did not expect the mandate delay to have any significant impact on the healthcare law’s implementation. The main reason, he explained, is that “the vast majority of employers that would be affected by the mandate already provide health coverage to their workers. Ninety-eight percent of employers with 200 or more employees and 94 percent of employers with 50 to 199 employees already offer their workers health insurance.” He cited another survey finding 94 % of employers said they would “definitely” keep, or be “very likely” to keep offering coverage once the ACA is fully implemented. “These employers are offering coverage absent any federal mandate or associated penalty. There is no reason to believe that this will suddenly change in 2014 if the employer mandate is delayed for one year.”
While the one-year delay in the employer mandate is welcome news for employers, they should not ignore the law’s coming changes. Rather, the delay provides employers with additional time and perhaps clearer direction on how to prepare for the employer mandate.
A complete list of panelists and links to their testimony can be found here.