In Charles Dickens’ holiday classic A Christmas Carol (1843), Jacob Marley’s ghost tells tight-fisted Ebenezer Scrooge that he will be haunted by three spirits, representing Christmas past, present and future.

Like old Scrooge, the Affordable Care Act this holiday season is being haunted by the spirits of the past, present and future. Having extended health coverage to over 7 million uninsured and secured insurance reforms like a ban on pre-existing condition exclusions, hopes remain high that Scrooge’s happy ending will come to the healthcare reform law.  

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An Affordable Care Act Christmas Carol

Fri Dec 19, 2014

In Charles Dickens’ holiday classic A Christmas Carol (1843), Jacob Marley’s ghost tells tight-fisted Ebenezer Scrooge that he will be haunted by three spirits, representing Christmas past, present and future.

Like old Scrooge, the Affordable Care Act this holiday season is being haunted by the spirits of the past, present and future. Having extended health coverage to over 7 million uninsured and secured insurance reforms like a ban on pre-existing condition exclusions, hopes remain high that Scrooge’s happy ending will come to the healthcare reform law.

The Spirit of the Past—

As 2014 comes to an end the Affordable Care Act is still haunted by mistakes made in enacting the original law in 2010. Congress approved the bill without a single Republican vote—steering public opinion against the law almost five years after enactment. Without political consensus landmark legislative change is not sustainable.

Moreover, the ACA is haunted by drafting errors, including that the law can be interpreted to permit federal subsidies only for people who enroll in state exchanges. The Supreme Court will decide the question in June but on that point the law is needlessly ambiguous.

Finally, past pledges by the law’s supporters that Americans could keep their insurance plans, that insurance costs would be reduced and that penalties for failure to purchase insurance were not “taxes” have come back to haunt the law.

The Spirit of the Present—

Fast forward to 2014 and the Affordable Care Act is now haunted by the November elections. Not only did Republicans gain a net 9 seats in the U.S. Senate to win a 54-46 majority for 2015-2016, but in the House of Representatives Republicans will have a 247-188 majority, the GOP’s biggest edge in at least a half-century.

To be sure, the ACA was not the only reason for Election Day results. But even senior senators like New York senator Chuck Schumer concede that it may have been a mistake for Democrats to enact the Affordable Care Act when voters were more concerned about bread-and-butter economic issues like jobs.

The Spirit of the Future—

One does not need an astrological calendar to predict that the ACA faces an uncertain future. Individual mandate taxes for failure to have health coverage jump in 2015 to 2% of household income or $325 per person, whichever is greater, though exemptions could cushion the blow.

Similarly, the employer “play or pay” mandate kicks in for 2015, with $2,000 or $3,000 per employee penalties for failure to offer affordable coverage that provides minimum value. And new reporting requirements could create a compliance nightmare for employers.

Moreover, while the Obama Administration anxiously awaits a Supreme Court decision on subsidies for federal exchange enrollees, the Republican-controlled Congress will be fashioning amendments to scale back sections of the law.

Furthermore, like Scrooge’s ghost of Christmas future, ACA’s ghost points at April 15, 2015 and what could be a challenging tax filing season. First, those who have failed to buy health insurance, unless eligible for an exemption, will owe individual mandate penalties.

Second, thousands of households who claimed premium tax credits for exchange-based coverage may have underestimated their income at time of application. Since the exchanges and IRS had little ability to verify incomes when subsidies were granted, these taxpayers may be required to reimburse IRS for improper subsidy payments.

Finally, the ACA’s 40% excise tax on high-value or “Cadillac” health plans takes effect in three years. This new tax could cause employers to increase employee out-of-pocket costs to minimize taxable premiums.

One detail everyone remembers about Dickens’ Christmas story is that the three spirits change Scrooge for the better. The miserly old crank is transformed and pledges, “I will honor Christmas in my heart, and try to keep it all the year. I will live in the Past, the Present, and the Future. The Spirits of all Three shall strive within me. I will not shut out the lessons that they teach!”

As HR, Payroll and Benefits professionals reflect on where the ACA has been, where it is today and what the future may hold, we understand that, like Scrooge, transformation awaits the Affordable Care Act. We can only hope the change is for the better and that it includes easing compliance burdens on employers as well as extending affordable health coverage to the uninsured.