Benefits consultants: employer-mandate delay brings mixed reaction

Area businesses with 50 or more full-time employees now have an extra year to make sure they are ready to meet the national health-care reform law’s mandate to provide health insurance for employees.

Employee-benefits consultants have been busy in the last few weeks making sure their employer clients understand what the delay involves.

The Obama Administration on July 2 announced it would delay by one year the employer-mandate requirement in the Patient Protection and Affordable Care Act (ACA).

When approved in 2010, ACA required that companies with 50 or more full-time workers begin providing those employees health insurance in 2014, or face costly penalties. The mandate is now scheduled to take effect Jan.1, 2015.

The announcement led to a mixed reaction among employer clients, according to a representative of one firm.

“I think you would say it’s equal parts relief, concern, and confusion,” says Thomas (Tom) Flynn, a principal with Mercer who is based in Rochester and works with clients across upstate New York.

The delay targets the shared-responsibility penalties that don’t apply now until 2015, and it also includes a delay on information-reporting requirements for a year, Flynn says.

The premium subsidies to help consumers pay for their insurance will still be available, Flynn says, noting some companies were also confused about that component of the law.

Clients have expressed “some relief” to have the extra time to prepare for the employer mandate, says Vanessa Flynn, vice president of client services at POMCO Group in Syracuse.

“There’s still a lot of work to be done by everyone, so having the benefit of some extra time is a very positive thing, quite frankly for all of us in the industry as we look forward,” Vanessa Flynn says.

Tom Flynn advises companies to keep preparing to deal with the ACA’s employer mandate, even though the penalty stipulation is on hold for 12 months.

“So, take this time as … we don’t have to hurry, not we don’t have to do,” he says.

Paying fees

Some businesses were also confused about the upcoming fee payment for the Patient-Centered Outcomes Research Institute (PCORI), known as the PCORI fee.

“People were confused on whether or not there was a delay on that, which there’s not,” Mercer’s Flynn says.

It’s actually a fee for the Patient-Centered Outcomes Research Trust Fund, according to the IRS.

The agency describes it as “a fee on issuers of specified health-insurance policies and plan sponsors of applicable self-insured health plans that helps to fund the PCORI. The institute will assist, through research, patients, clinicians, purchasers and policy-makers, in making informed-health decisions by advancing the quality and relevance of evidence-based medicine. The institute will compile and distribute comparative clinical-effectiveness research findings,” according to the IRS.

That fee is due at the end of the month.

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year. For policy and plan years ending after Sept. 30, 2012, and before Oct. 1, 2013, the applicable dollar amount is $1. For policy and plan years ending after Sept. 30, 2013, and before Oct.1, 2014, the applicable dollar amount is $2, the IRS said.

Besides the PCORI fee, employers and other sponsors of self-funded plans, and the insurance companies offering health-insurance plans are subject to the health law’s transitional-reinsurance fee. That responsibility starts in 2014 and continues through 2015 and 2016.

This fee is designed to fund reinsurance payments to health-insurance issuers that cover high-risk individuals in the individual market.

Both fees apply to all plans, Vanessa Flynn says, regardless of whether they are a self-funded plan through a third-party administrator such as POMCO Group or a fully insured plan through a health insurer.

“The one thing that’s been consistent about this is that we’re really not surprised about anything,” she says.

Delay details

Mark Mazur, assistant secretary for tax policy, made the announcement July 2 in a blog posting on the website of the U.S. Department of the Treasury.

Mazur’s post was entitled “Continuing to Implement the ACA in a Careful, Thoughtful Manner.”

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so,” Mazur said in the blog post.

The one-year delay is intended to accomplish two goals, Mazur said.

“First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees,” Mazur said.

The Affordable Care Act includes information reporting by insurers, self-insuring employers, and other parties that provide health coverage. It also requires information reporting by certain employers regarding the health coverage offered to their full-time employees.

The Obama Administration expects to publish proposed rules implementing these provisions this summer. That will follow a dialogue with stakeholders, Mazur said.

The stakeholders include employers that already provide their full-time workers with coverage exceeding the minimum employer-shared responsibility requirements, he said.

Once these rules have been issued, the Obama Administration will work with employers, insurers, and other reporting entities to “strongly” encourage them to voluntarily implement this information reporting in 2014, in preparation for the full implementation in 2015, Mazur said.

One national business group that opposed the health-care reform law in arguments before the Supreme Court last year says the delay just proves the law is not workable.

“This is simply the latest evidence that implementation of this terrible law is going to be difficult if not impossible, and the burden is going to fall on the people who create American jobs,” Amanda Austin, director of federal public policy at the National Federation of Independent Business (NFIB), said a news release. “Temporary relief is small consolation. We need a permanent fix to this provision to provide long term relief for small employers.” Mike Durant, NFIB/New York state director tweeted out Austin’s statement today.

Contact Reinhardt at ereinhardt@cnybj.com