The Affordable Care Act (ACA) is barely one month away from its first major milestone on October 1, 2013 when Health Insurance Exchanges (HIX) will be operational. The HIX is the marketplace for individual and small businesses to purchase affordable health insurance. As this deadline approaches, a flurry of anxiety and confusion will inevitably surface. Change is never easy even when it’s simple – and changes in health care are never simple. In addition, with the many challenges to the ACA, many did not seriously consider the implementation requirements until after the Supreme Court decision last year which explains some of the rhetoric that is emerging now. We will take this opportunity to address key issues as they emerge during this major implementation process.
Employer Reporting Requirements delayed for one year: Transition Relief
The first change to set a ripple of chatter among both supporters and detractors was the decision by the Internal Revenue Service (IRS) to offer “transition relief” for one year to large businesses from the detailed reporting (and consequent penalties for non-compliance) required in 2014. The change is only to the reporting requirements – employers are still required to ensure that all full-time employees in large businesses have insurance coverage at the minimum essential level or risk paying a penalty called the Employer Shared Responsibility provision. The IRS (as the responsible agency for assigning these penalties) has given employers one year to understand the reporting requirements – no penalties will be assessed if there are errors in this reporting for 2014. Assignment of this penalty will initiate in 2015. The IRS urges employers to voluntarily comply with the reporting provisions for 2014. This responds to business concerns that they have not had the time to learn the rules and implement them, and to collect salient information, when the law goes into effect. Remember also that there are no penalties for the smallest employers (with 50 and under employees). For details on the IRS guidance: www.irs.gov/pub/irs-drop/n-13-45
UPS drops coverage for some spouses
The second event to hit the news was initiated by a giant employer, United Parcel Service (UPS) which, citing the ACA chose to exclude from coverage those spouses who could obtain health plan coverage through their own employers. (UPS will cover spouses who do not have coverage through their employers.) Now, a small but growing number of companies have already implemented this practice even before the ACA; UPS is the first to blame the ACA for this change. The reason some companies are changing spousal coverage practice is this: if spouses choose not to pick up their own employer’s plan, it reduces costs for that company but it adds costs to the company that provides spousal coverage. This is one of the many wrinkles in our disjointed system of coverage. The irony of this of course is that health care premiums have been rising at the rate of almost 7-10% every year and UPS and other companies would have meekly accepted these increases if the ACA was not around. The Congressional Budget Office estimated the impact of the ACA on large employers as negligible. For a more detailed analysis see Kaiser Health News: UPS Won’t Insure Spouses of Some Employers available at: http://bit.ly/12oAKp9
Readers are invited to submit any questions about the ACA to the New Mexico Mercury and will be answered in future updates.
Responses to “Countdown to health care reform”