Last week the Obama administration announced a delay of the employer mandate portion of the Affordable Care Act (ACA). More delays have been announced since–most of which pertain to exchanges in the states that elected to run their own exchanges. The regulation delays were released Friday (View) and are summarized below:
1. State-run exchanges will not need to verify if applicants have access to affordable health insurance through their employer.
Originally, the federal government decided it would handle the employment verification process of those who enrolled in health exchanges. However, “current legislative and operational barriers prohibit HHS from requiring employers to report information directly to Exchanges or requiring Exchanges to obtain employer data from the Internal Revenue Service.” This means the burden of verifying applicants has shifted to the 17 states running their own exchange, but that responsibility will not be enforced until 2015. This means for 2014, states will not be required to verify eligibility.
Highly paid employees with access to employer-sponsored health insurance may not find better rates through the exchange. However, those who make less than 400% of the Federal Poverty Level (FPL) and claim to work from an employer that doesn’t offer health coverage could receive a federal subsidy when they are not entitled to one.
2. The federal government will be less aggressive when auditing applicants’ incomes.
The original plan was for the federal government to verify applicants’ incomes through IRS reporting. The idea behind this was to prevent applicants from receiving higher tax credits by claiming a lower income. On the flip side, those in states that chose not to expand Medicaid could see residents who do not qualify for Medicaid and do not make enough to be eligible for a federal subsidy over-report their income to receive tax credits. Again, due to a lack of manpower, the federal government has decided to hand this responsibility to the state exchanges in the 17 states that run an exchange. As with employer-sponsored insurance access, the states have been given until 2015 to begin verifying applicants. This will allow for an “honor system” until 2015 where applicants might misreport their income.
The two changes mentioned above partially answer the question, “how will the exchanges know if an applicant has access to employer-sponsored insurance?” discussed yesterday in “ACA Provision Delay Raises More Questions.”
3. Electronic notices will not be required until 2015.
The administration is concerned that states will not be set up to deliver electronic notifications by 2014. As a result, the requirement that applicants be able to receive notifications electronically has been delayed an additional year.
A Gallup Poll conducted last month revealed that 43% of uninsured Americans are unaware of the individual mandate requirements. Since then, four significant changes to the ACA have occurred and the changes occurred over a period of four days. It is very likely that more changes will come and as an employer, employee or potential applicant, it is imperative for you to understand how the law and any changes to the law will affect you. SOI will continue to update you with any changes and results of these changes as they occur.
About SOI
SOI is a leading professional employer organization (PEO) for small and medium-sized businesses (SMBs) serving as a trusted partner in integrated human resource (HR) compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing. SOI is based in Charlotte, NC and supports tens of thousands of worksite employees throughout the U.S. For more information, visit SOI.com
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