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Delay on ACA mandates was unavoidable

With the announcement from the Obama administration regarding the delay of the Affordable Care Act’s employer mandates, business owners took a slight sigh of relief heading into the Fourth of July weekend.  In the announcement made on the U.S. Treasury’s website, the “concerns about the complexities” was cited as a reason for delay.  A vast number of businesses do not have the resources, or the understanding of the intricacies of the guidance, to meet the deadline of 2014.

The administration underestimated the financial burden that the reporting requirements would place on employers, insurers and the entities receiving those reports. Furthermore the Health and Human Services, the DOL and the IRS have been unable to effectively manage or provide realistic, timely guidance for employers.  The business community has been voicing their discontentment for quite some time and, as the 2014 deadline looms closer, those voices become louder.

There are several factors at work that made this delay unavoidable. The federal government did not anticipate the number of states that would opt for a federally run exchange.  By adding the employer mandates and tracking requirements on top of implementing the exchanges, it all became too much of burden under the proposed timeline.  This does shift the focus from the employers to the individual mandate but with this huge concession it leaves room to wonder what else will be delayed.  The announcement also referenced streamlining the reporting and alleviating requirements for employer groups that meet compliance standards.

Many employer groups have invested dearly in trying to prepare their businesses to meet the convoluted guidance that has been released thus far and, although relieved for the extension and hope of simpler requirements, this delay can add to the frustration caused by the legislation and the far-reaching implications. The lack of final guidelines has left many employers to guess what to do next and puts vendors, who are developing technology to assist businesses, in a position to make assumptions that could be costly and create unnecessary work for employers.  This reprieve gives everyone – including policy makers – an opportunity to take a much-needed step back.

The question remains how this will ultimately affect the life span of reform and the impact on the Obama administration, and what the inadvertent consequences will be from this decision.  It is difficult to say if this will be a win or lose.  On one hand, they are counting on favor from business owners due to the sympathetic, “careful, thoughtful” ear they have given them regarding implementation of the requirements.

Others will argue that this is the beginning of the end and will give critics new ammunition to attack the legislation, picking it apart piece by piece.  In light of this development it will be interesting to see what the final guidance will reveal and the national reaction to such an announcement.  The Administration will continue to communicate the need for reform as it is the cornerstone of Obama’s presidential legacy but, more than likely, this delay will fuel criticism that is already strong for the repeal of reform.  Some unintentional results could include employers not expanding coverage to employees not currently benefit eligible but also may keep employees’ hours from being cut.

Some employers, in order to avoid penalties, were cutting a majority of their hourly employees to below 30 hours a week.  At 30 hours a week, an employee is considered full time under the mandate and penalties can be assessed on those employees.  This also stands to have a bearing on Medicaid expansion, and sheds doubt on the assurances that have continued to flow from the White House that everything is on track, a statement made as recently as June.  And one cannot help but raise questions about the timing as it relates to mid-term elections.

 

Shay Bierly is the director of client services for MJ Insurance and its Employee Benefits division in Phoenix.