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Employer Mandate Delay Brings Relief, But Nausea, Migraines To Come

BRIAN DRISCOLL AND PIA BROWN (as printed in The Hartford Business Journal)
Health insurance professionals with any long-standing tenure are generally inoculated against the headaches, fatigue, and nausea that impact the population at large with regard to federal or state healthcare regulatory changes.

The biggest of these to arrive from Washington is the postponement of the Affordable Care Act (ACA) employer mandate, which likely will only be the first of many changes to the law's implementation.

For employers and insurers, the symptoms related to healthcare regulation are real, and the recent modification to the law will incur a variety of responses.

In an unusually benign manner, the federal government announced a delay in a key part of the employer mandate. Released via a Treasury Department blog, the delay of the ACA's Employee Shared Responsibility component (a.k.a. "Pay or Play") actually came secondarily as a result of a need to provide a transitional year for reporting obligations under the law.

So what is changing?

You will not be assessed penalties in 2014 if you are a large employer (50 or more employees) and you have employees that obtain subsidies through the health insurance exchange because you do not offer coverage, or your coverage is either unaffordable or does not meet minimum value.

What does not change?

• The launch of state health insurance exchanges.

• Subsidy programs within the insurance exchanges.

• The individual mandate.

• Any other ACA provision.

What about individuals?

Though the employer reporting requirements and the employer penalties have been postponed a year, the individual mandate requirement remains intact. Originally, individuals who choose to purchase coverage through an exchange would be required to submit information verifying the availability and/or affordability of coverage provided by their employer.

If an individual was eligible for "affordable" coverage and that coverage was determined to meet the minimum actuarial value of 60 percent, they would not be eligible to receive a subsidy to purchase insurance via an exchange.

Now, however, since both employers and insurers will not be required to report data on who is covered, any individual will be eligible to purchase coverage through an exchange and receive a subsidy without any verification of their access to affordable coverage.

Likewise, since employers and insurers will not be reporting who is actually covered, it appears as though the Treasury Department will have no valid way to enforce the individual penalty should someone decide not to purchase coverage all together. Essentially, this translates to the "honor system."

As we try to anticipate the next wrinkle in the implementation of the ACA, keep an eye on several items:

• Guidance within the next week: The Treasury has committed to provide additional guidance regarding this transition. One item that needs to be addressed is whether the employer notification requirement still applies. Currently, employers are required to provide notice to all employees by Sept. 23, regarding the availability of exchanges as well as information about their plan.

• Is this legal?: There will continue to be extensive dialogue surrounding whether or not the Treasury has the constitutional authority to selectively implement a law passed by Congress and signed by the President.

• Delay of Individual Mandate?: There already appears to be bi-partisan chatter asking "if employers get a break, why not individuals?" If this sentiment has any momentum and results in a similar change, you will likely see an immediate withdrawal from the individual marketplace by insurers inside exchanges.