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Treasury Responds to Republican Requests for Information on Employer Mandate Delay

SEP. 18, 2013

Treasury Responds to Republican Requests for Information on Employer Mandate Delay

DATED SEP. 18, 2013
DOCUMENT ATTRIBUTES

 

September 18, 2013

 

 

The Honorable Fred Upton

 

Chairman

 

Committee on Energy and Commerce

 

U.S. House of Representatives

 

Washington, DC 20515

 

 

Dear Chairman Upton:

I write in response to your recent letter to Secretary Lew regarding implementation of the Affordable Care Act (the ACA). The first open enrollment in the health care Marketplaces (also known as Exchanges) remains on schedule to begin next month. Once fully effective, the ACA is projected to provide health insurance for nearly 30 million additional Americans. Together with the other agencies involved, we are implementing the ACA to build on the progress we have seen already in making health coverage better and more affordable.

Your letter asks about our decision to provide transition relief, which we announced on July 2, 2013, with respect to three provisions of the ACA. The first provision is the information reporting requirement under section 6055 of the Internal Revenue Code (the Code), which applies to insurance companies, self-insuring employers, and certain other entities that provide minimum essential health coverage. The second is the information reporting requirement under section 6056 of the Code, which applies to applicable large employers. The third is the employer shared responsibility provision under section 4980H of the Code.

We have been working with your Committee and other Committees to respond to questions about the transition relief. We have responded to questions in a July 9 letter; we have testified at hearings before the House Ways and Means Health subcommittee and the House Energy and Commerce Oversight and Investigations subcommittee on July 17 and July 18, respectively; and we have participated in a bipartisan Congressional staff briefing on July 19. Treasury appreciates Congress's important oversight role and is committed to providing the Committee with the information it needs.

You have asked about the bases for the decision to provide transition relief. Below we describe how we reached our decision. We also have enclosed documents responsive to your request.

 

I. Transition Relief Addressed Input from Stakeholders.

 

Treasury decided to provide transition relief after receiving feedback over the course of 2012 and 2013, As we described in testimony before your Committee, Treasury has been engaged in a dialogue with stakeholders, including employers, insurers, and governmental entities. Such stakeholders -- including the U.S. Chamber of Commerce, the Business Roundtable, the Blue Cross Blue Shield Association, Aetna, the National Association of Health Underwriters, and the American Benefits Council -- submitted comments on the information reporting provisions of both section 6055 and section 6056. We have enclosed those comments with this letter. Particular comments expressed concern about the anticipated difficulty or cost of complying with the reporting requirements, the desire that the reporting process be made as simple as possible, and the need for adequate lead time to adapt information gathering and reporting systems to implement the reporting requirements effectively.

We are working hard to adapt and to be flexible about reporting requirements as we implement the Affordable Care Act. At various points in the process, Treasury has discussed the reporting provisions with others, including government offices that help coordinate the efforts of the multiple federal agencies involved in implementing the ACA. Ultimately, Treasury decided to provide an additional year as a transition period before the ACA employer and insurer reporting requirements would first apply. We also extended this transition relief to the employer responsibility provisions under section 4980H, which would have been impractical to implement without the reporting information.

This decision was an exercise of Treasury's longstanding administrative authority to promulgate rules and regulations implementing provisions of the Code, Treasury's authority under section 7805(a) of the Code has been used to postpone the application of new legislation on a number of prior occasions across Administrations. Our July 9 letter described some such examples -- including Notice 2011-69 regarding the Airport and Airway Extension Act, Part IV (signed August 5, 2011); Notice 2007-54 regarding the Small Business and Work Opportunity Act of 2007; and Notice 2000-5 regarding the Tax Relief Extension Act of 1999. The formal guidance describing the transition relief was issued on July 9, 2013, as Notice 2013-45.

The transition relief is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the Affordable Care Act. 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. The transition relief does not affect employees' or other individuals' eligibility for the premium tax credit available under the ACA. It also does not have any impact on the effective date of any other provision of the ACA, such as the insurance market reforms, the individual responsibility provisions, or the various revenue provisions.

Since we announced the transition relief, representatives of the business community have issued public statements in support of our decision. For example, the National Retail Federation and the American Benefits Council each announced that it "applauds" the decision.1 The U.S. Chamber of Commerce said that the decision was "welcomed by the business community."2

 

II. Treasury Has Proposed Regulations to Implement the Reporting Requirements.

 

On September 5, 2013, we issued proposed rules to implement the reporting requirements. The proposed rules describe a variety of potential options to simplify and streamline the reporting rules, such as:
  • Permitting health insurance issuers, employers, and other reporting entities under section 6055 to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, and the portion of the premium paid by an employer;

  • Replacing section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses, and dependents:

  • Eliminating the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees;

  • Allowing employers to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount;

  • Allowing self-insured group health plans to avoid furnishing employee statements under both section 6055 and section 6056 by furnishing a single substitute statement:

  • Allowing limited reporting for certain self-insured employers offering no-cost coverage to employees and their families; and

  • Permitting health insurance issuers to forgo reporting under section 6055 on individual coverage offered through a Marketplace because that information will be provided by the Marketplace.

 

Stakeholders are invited to submit comments on the proposed reporting rules, and those public comments will be taken into account in developing final reporting rules. Reporting entities will be encouraged to implement information reporting in 2014 voluntarily (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015. During this 2014 transition period, we will also strongly encourage employers to maintain or expand health coverage.

In addition to the information provided in this letter, enclosed please find documents responsive to your request for materials about the issues both raised in the dialogue with stakeholders and considered in our deliberations. If you need additional information, please let us know. We look forward to continuing to work with you on the implementation of the Affordable Care Act.

Sincerely,

 

 

Alastair M. Fitzpayne

 

Assistant Secretary for Legislative

 

Affairs

 

Enclosures

 

 

Identical letter sent to:

 

The Honorable Marsha Blackburn

 

The Honorable Tim Murphy

 

The Honorable Joseph R. Pitts

 

The Honorable Michael C. Burgess

 

 

cc:

 

The Honorable Henry Waxman

 

The Honorable Diana DeGette

 

The Honorable Frank Pallone

 

FOOTNOTES

 

 

1 See July 2, 2013 press releases "Council applauds Obama Administration's move to delay health law reporting requirements," available at http://www.americanbenefitscouncil.org/newsroom/2013/pr13-09.cfm. and "NRF Applauds Administration's Decision to Delay Provisions of the Affordable Care Act," available at http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=1616.

2 See July 3, 2013 press release "U.S. Chamber's Donohue Comments on Obama Administration's Delay of Employer Mandate," available at http://www.uschamber.com/press/releases/2013/july/donohue-comments-obama-administrations-delay-employer-mandate.

 

END OF FOOTNOTES
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