In a recent webcast on Affordable Care Act employer compliance challenges, Ceridian's Jim O'Connell discussed how a new President and Congress might be expected to change the healthcare reform law next year.  

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The Affordable Care Act: Get Ready. Change is Coming

Fri Jun 17, 2016

Nearly 1,000 people signed up for a special Ceridian Webcast this week on Affordable Care Act employer compliance challenges and how a new President and Congress might be expected to change the healthcare reform law next year.

ACA Compliance Challenges

We started with a review of the “Big 4” compliance challenges employers face in 2016:

Number OneThe employer shared responsibility mandate to offer affordable and minimum value health coverage to full-time employees or be liable for penalties. New for 2016 is that employers with 50 or more full-time employees are subject to this mandate and that employers must offer coverage to 95 percent of full-time employees, up from 70 percent in 2015.

Number TwoSec 6055 and 6056 health coverage information reporting using specific “indicator codes.” ACA employer reporting is a “file” and “furnish” requirement—employers must file annual information returns with IRS and furnish statements to full-time employees. Forms 1094 and 1095 reporting is IRS’s main enforcement mechanism for the employer mandate, the individual mandate to enroll in coverage and eligibility for the premium tax credit subsidy.

Number ThreeThe definition of and process for identifying “full-time” employees for purposes of Affordable Care Act eligibility for health coverage. Employers are required to use “look-back measurement periods” and going forward “stability periods” to determine which employees average 30 or more hours per week, to whom employers must offer affordable and minimum value health coverage.

Number FourThe 40 percent “Cadillac Tax” on high-value health plans, scheduled to take effect in 2020 and which is estimated to affect over half of all employer-sponsored health plans.

Responding to a Webcast polling question, 69 percent of respondents said Forms 1094/1095 information reporting was their most challenging compliance issue.

Affordable Care Act Change 2017

As the presidential campaigns of presumptive nominees Hillary Clinton and Donald Trump gear up, it’s becoming clear that regardless of who is elected president in November, the ACA will be changed next year.

For one thing, Republicans and Democrats both now favor change. The word “change” may mean vastly different things to Republicans and Democrats, but both have moved subtly from earlier positions respectively to eradicate the law completely or preserve it untouched.

For another, both parties appreciate that the ACA has achieved some success, especially that 20 million Americans now have health coverage through the Affordable Care Act. As of 2016 a full 90 percent of Americans now have health coverage, an all-time record.

Both parties also realize that six years after enactment the Affordable Care Act still lacks the political consensus that would assure broad public acceptance. Polls consistently show that a near-majority of the public disapproves of the law. Like Medicare, FMLA and ERISA, a bipartisan consensus will be necessary if ACA is to endure.

What ACA Changes to Expect in 2017

While it was not possible in this week’s Webcast to discuss the wide range of Affordable Care Act change possibilities, including Senator Sanders’ “Single Payer” (Medicare for all) proposal, Republicans’ promise to repeal the Individual Mandate or Mrs. Clinton’s “Public Option” idea for the exchanges, two changes were considered.

Number OneThe 40 percent “Cadillac Tax” will very likely be repealed. With now near-zero support on Capitol Hill, the tax remains one of the biggest weaknesses in the healthcare reform law.

The only question remaining is whether the new President and Congress will replace the $90 billion in revenue lost by throwing the tax overboard. One replacement candidate that some propose would be a cap on the present tax exclusion for employer-provided coverage. Like the present law cap on tax-free life insurance benefits, such a cap would limit how much an employee may exclude from income taxes.

Number TwoThe Employer Shared Responsibility mandate will be changed. This requirement, enmeshed with information reporting and “look-back stability periods,” was placed in the Affordable Care Act for one reason: to help reduce the number of uninsured.

Laudable as that goal was—and is—the question must be asked, is employer shared responsibility expanding health coverage enough to justify this complex and costly employer compliance mandate? Or worse, what if this mandate causes some employers, over time, to scale back employee health coverage? Put another way, what if the employer mandate has an effect opposite what was intended?

The Ceridian Webcast reviewed several potential possibilities—a change in the definition of “applicable large employer”; a change in the definition of “full-time employee”; and, based on an objective appraisal of employers’ experience with 2016 information reporting, a likely reconsideration of Forms 1094/1095 reporting procedures.

Achieving a so-far elusive political consensus on the Affordable Care Act in 2017 will require winning over the hearts and minds of millions of Americans who remain skeptical of the 2010 law. It will also require an understanding by both political parties and their presidential candidates that today some 155 million people have their health insurance through employer-provided plans.

However the Affordable Care Act is changed in 2017—and it will be changed—Republicans and Democrats will surely take care to strengthen, not jeopardize, employer-sponsored health coverage.