Group Asks Supreme Court to Review Challenge to Employer Mandate

The Association of American Physicians and Surgeons (AAPS) is asking the Supreme Court review a case that challenges the ACA’s employer insurance mandate (Stephen F. Hotze, M.D., and Braidwood Management v. Sylvia Mathews Burwell and Jacob J. Lew). Employer, Braidwood Management, says that it was forced to purchase ACA-compliant insurance at inflated premiums to avoid a $100 per-day/per-individual tax (or penalty). Braidwood Management says that, because of the ACA’s coercive intrusion, it could no longer purchase the pre-ACA low-cost insurance with the options it preferred. The ACA reduced market choices, increased prices, and limited some features that Braidwood Management and its employees valued.

The AAPS says that the mandate is unconstitutional because the Constitution requires all revenue-raising bills to originate in the House of Representatives. AAPS executive director Jane M. Orient, M.D. said, “The ACA is basically the Harry Reid bill. The…ACA was drafted in the Majority Leader’s office, outside the usual committee process. The legislative process [was] reduced to backroom horse-trading to secure the moderate members of the majority caucus without inviting input from the Senate minority.

The Fifth Circuit dismissed the case, saying that the Anti-Injunction Act (AIA) does not allow businesses to bring pre-enforcement challenges to the employer mandate (tax). But attorney Lawrence Joseph argues that the Anti-injunction Act does not apply to regulatory taxes under the ACA, nor does it prohibit challenges to illegal or unconstitutional taxes. Moreover, employers like Braidwood Management have no post-enforcement remedies to recoup a tax they never paid. Finally, even without ruling on ACA’s tax penalties themselves (as taxes), a federal court would have jurisdiction to stop the ACA’s unconstitutional intrusion into the health-insurance marketplace. “Some may say that, after a couple of big setbacks to challengers in the Supreme Court, ACA is here to stay. But because of its sloppy drafting, frenzied enactment, and widespread destructive effects on freedom, the economy, and the practice of medicine, there will be legal challenges as long as it is in effect,” Orient added.

ACA’s employer mandate goes into effect for some businesses

Businesses with 100 or more full-time employees must offer health insurance to at least 70% of those employees this year or face a tax penalty under the Affordable Care Act. New reporting requirements also take effect this year, and some consultants are offering training sessions. American City Business Journals/Portland, Ore./Health Care Inc. Northwest blog (12/29)

Doctors Warn that ACA Pain Has Just Begun

The President’s unilateral delay of the employer mandate is about over.  Businesses with 50 or more full-time employees will have to start filing detailed reports with the IRS in January 2015, according to a statement by the Association of American Physicians and Surgeons (AAPS). “Full time” means 30 hours or more. Congressman Michael Burgess (R-Tex.) called attention to this during a conference call co-sponsored by the Galen Institute, “Penalties don’t kick in until next year, but the data collection requirements are huge and complex. Burgess said that professional assistance is likely needed.”

Employers must report the number of hours worked, as well as health insurance coverage for each worker. AAPS executive director Jane M. Orient, M.D said, “The pain from the Affordable Care Act has only just begun. Higher insurance premiums, penalties for not satisfying ObamaCare mandates, and data collection expenses are unaffordable for many businesses. Costs are passed along to workers, who may lose their job altogether or be forced to work at two part-time jobs, as well as to customers. Many businesses will decide not to expand, or could fold.” The Congressional Budget Office doesn’t count such costs to Americans, she noted.

In the King v. Burwell case, the Supreme Court could rule that ACA means what it says about subsidies only flowing  through state-established exchanges. That is the source of much uncertainty. If that is the decision, States that declined to set up an exchange could be under a lot of pressure. Orient said, “People need to remember that those subsidies are the trigger for the employer mandate’s penalties. There is no free money. Some get other taxpayers to help pay their premiums; others may lose their job.”

ACA to Bring Profound Changes in 2015

ACAThe Affordable Care Act (ACA) will bring profound changes to health benefits in 2015, according to a statement by Ben Geyerhahn, CEO and Founder of BeneStream. Coverages mandated by the ACA go into effect on January 1. There is also the requirement that companies with 100 or more employees must offer health benefits to all full-time staff under the employer mandate.

The employer mandate will affect the working poor the most. This year the working poor are being offered a range of options by employers, which means that many will have health insurance for the first time in 2015. However, any additional cost to the monthly budget is more than many can afford. That’s why 29 states passed Medicaid expansion. Because of the expansion, Medicaid now covers up to 138% of the poverty rate, which is $32,900 in income per year for a family of four.

With the exchanges, access to health insurance means more preventative care versus emergency care. More people have health insurance upon arrival to the emergency room, which lowers costs. With the employer mandate taking effect, these factors will continue to improve.

However, full-time employees who have been getting health insurance are likely to have fewer plan options than in previous years, and those options will come with narrower networks. Many employees will see higher monthly premiums with higher deductibles along with a smaller range of in-network doctors. And some plans no longer cover out of network doctors.

Also, family coverage will evaporate for many this year. Families can go to the exchange to get the remaining members covered while some may qualify for the Children’s Health Insurance Program (CHIP). 

Delay of Employer Mandate Not Expected to Have a Big Impact

There is a one-year delay in the mandate requiring large employers to provide health insurance to their workers. A Rand study finds that this delay will not significantly hurt the goals of the Affordable Care Act. However, a repeal of the requirement would seriously undermine financial support for the law. The one-year delay announced by federal officials in July means that an estimated 300,000 fewer people will have employer-sponsored health insurance during 2014 and the federal government will collect $11 billion less during the period to help support the Affordable Care Act.

Both of the numbers are small compared to the overall size of health insurance expansion and revenue generated under the Affordable Care Act. However, if the large employer mandate were repealed, revenue would fall by $149 billion over the next 10 years because of lost penalties – about 10% of the total spending offsets being used to support the law.

Under the law, companies with more than 50 workers must offer workers affordable health care coverage or pay penalties. The provision affects a relatively small group of companies because more than 95% of large employers already offer their workers health coverage.

About 1,000 fewer companies – less than 1% of large employers – will offer coverage in 2014 because of the enforcement delay.  Once the insurance mandate is enforced on large businesses, an estimated 0.4% of large employers, who employ 1.6% of the nation’s workforce, will pay a penalty for not offering health insurance at all.

An estimated 1.1% of large companies will pay a penalty for offering unaffordable coverage to their workers. These companies employ fewer than 1% of the nation’s workforce. The study, “Delaying the Employer Mandate: Small Change in the Short Term, Big Cost in the Long Run,” is at this address:

The Fallout of the Employer Mandate Delay

falloutobamacareThe White House has decided to postpone the employer mandate, the rule that says large employers with 50 or more full-time equivalent workers must offer qualified, affordable coverage or pay a penalty.

Employers Get More Time to Prepare

Julio Portalatin, president and CEO of Mercer said, “The delay will give employers more time to cope with some of the requirements, but they know it’s no free pass. We expect employers to stay 100% focused on cost management.”

Mercer expects employers to continue preparing for compliance. In a May survey by Mercer, about a fourth of employers hadn’t decided how they would track and report variable employee work hours and a third hadn’t decided which look-back period to use.

About a third of employers do not offer coverage to employees working 30 0r more hours a week. Many of these employers have already made plans offer the coverage in 2014. “Most have not announced changes yet, and if they have an extensive part-time work force, the money to be saved by not expanding coverage in 2014 could be considerable,” said Tracy Watts, a Mercer senior partner.

Janet Trautwein, CEO of NAHU said that delaying the mandate will allow businesses that are recovering from the recession to make sound business decisions in complying with the law without fear of significant financial penalties in the first year of changed operations. Trautwein noted that about 98% of all large employers in the United States already offer coverage.

Private Exchanges May Get a Boost

According to Mercer, the delay creates a gap year for employees that had been enrolled in mini-med plans, which cannot be offered after the end of the 2013 plan year. This may give employers another reason to offer a private health exchange in 2014. Employees who don’t qualify for subsidies in the public exchanges can purchase lower cost medical plans and supplemental medical benefits through a private exchange. Because employers don’t have to make their coverage affordable for another year, employers can choose whether, or how much, to contribute to the cost of coverage.

California Insurance Commissioner Dave Jones said, “Over 92% of California employers with more than 50 employees already offer health insurance…We anticipate that they will continue to do so…even without the existence of a penalty…The requirement that large employers provide health insurance to their employees is an important component of ObamaCare and the Administration should make sure that this provision can be implemented in 2015. In the meantime, uninsured workers will be able to purchase health insurance through the California health benefit exchange.”

Employers Are Less Likely to Cut Hours

According to an analysis by Jackson Hewitt Tax Services, the one-year delay may make employers less likely to cut employee hours below 30 hours per week in order to classify them as part-time. With the one-year delay, some employers may postpone offering any coverage to dependents. Interestingly, this may have a positive effect on such families.  First, children without an offer of employer-sponsored coverage may be eligible for the Children’s Health Insurance Program (CHIP) if they meet income and other eligibility requirements. They may also be eligible for the new premium assistance tax credits in 2014 even if the household income is above the state-specific CHIP limit. Employers may be more likely to cooperate with enrollment efforts to get uninsured employees and their uninsured dependents covered under various ACA programs because they know that they won’t face a penalty in 2014.

Less Pressure to Expand Medicaid

States may have less pressure from business interests to expand Medicaid.  A Jackson Hewitt report estimates that employers would incur $876 million to $1.3 billion in penalties in 22 states that are refusing to expand their Medicaid programs.  The delay in the mandate removes that penalty liability for 2014.  However, employers in these states will face the penalties in 2015.

Health Exchanges Are Still on Track

Brian Haile of Jackson Hewitt said that the delay alleviates several key concerns among employers with a significant part-time and seasonal workforce. Regardless of the delay in the mandate, “We continue to expect the launch of the health insurance marketplaces on October 1, 2013,” he said.

President’s Motives Questioned

Mark Mazur, the Assistant Secretary for Tax Policy at the  Treasury Dept. said the delay, “Will allow us to consider ways to simplify the new reporting requirements…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.”

Benjamin Domenech says that the delay in the employer mandate is simply an attempt to prevent the implementation of President Obama’s signature domestic policy until after the midterms. “He knows how unworkable his health policy overhaul is; he just doesn’t want to suffer the political consequences while in office. Congress passed the employer mandate into law, and the executive branch is now refusing to enforce it. This is nothing more than rule by regulators attempting to slow the train wreck until they’re out of power and don’t have to answer for their bureaucratic mismanagement.”

Consumers Want An Obamacare Health Insurance Waiver Too

Following the administration’s decision to delay the employer mandate penalty, 41% of consumers say that the same temporary waiver should apply to uninsured individuals, according to a survey from HealthPocket. The majority of adult Americans face penalties if they are uninsured. Fines are scheduled to take effect in 2014. The penalty for not being insured is intended to maximize the number of healthy people in the insurance pool, thereby lowering both insurers’ risk base and health insurance premiums. The 2014 fee for uninsured individuals is 1% of their annual income or $95, whichever is higher. The penalty increases annually until reaching $695 or 2.5% of annual income, whichever is highest. There is a cost-of-living adjustment after 2016 based. For more information, visit

The Employer Mandate Gets a One-Year Delay

ObamacareThe Obama administration announced that it will delay enforcing the employer mandate provision by one year, until 2015. Under the mandate, businesses with more than 50 employees must provide health insurance to workers or pay a penalty until 2015.

Valerie Jarrett, a senior adviser to President Barack Obama said, “In our ongoing discussions with businesses we have heard that you need the time to get this right. We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination. So we plan to re-vamp and simplify the reporting process. Some of this detailed reporting may be unnecessary for businesses that more than meet the minimum standards in the law. We will convene employers, insurers, and experts to propose a smarter system and, in the interim, suspend reporting for 2014.”

Neil Trautwein of The National Retail Federation said,” This one year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment.”

The National Assn. of Health Underwriters (NAHU) says that it has had longstanding concerns that employers would have had a very short timeframe to comply with very new complex requirements and that they could be penalized for inadvertent violations. According to the NAHU statement, “As employer groups deal with questions on how this delay will affect their businesses, we encourage them to seek counsel from an experienced, licensed health insurance agent. These professionals can help employers prepare for the new 2015 deadline as well as assist in finding affordable plans that fit the needs of employees and their families.”

Last Updated 12/01/2021

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