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Businesses Brace for Health Law Mandate After IRS Notice

By Melissa Attias, CQ Roll Call

July 25, 2014 -- The health care law's employer mandate—which is at the center of Speaker John A. Boehner's effort to sue President Barack Obama—may finally be on the path to implementation based on the administration's decision to release draft forms late last week.

The Internal Revenue Service (IRS) posted drafts of documents that businesses are supposed to use to report on the health coverage they offer their employees and would be used to enforce provisions in the law (PL 111-148, PL 111-152) that generally require employers with 50 or more full-time workers to offer insurance or pay a penalty. The drafts are intended to help employers, tax professionals and software providers "prepare for these new reporting provisions and to invite comments from them," according to a statement on the IRS website.

To business groups, the move is a signal that federal officials are preparing to push ahead with the twice-delayed requirements.

Michelle Neblett, the National Restaurant Association's director of labor and workforce policy, said she thinks it "clearly indicates to employers that they're moving ahead and that employers have to rush to get ready for Jan. 1." And Neil Trautwein, vice president and employee benefits policy counsel at the National Retail Federation, said his thinking was that the administration would rather "crawl over broken glass" than put the mandate off again, and that this move illustrates its determination.

"I don't anticipate a further delay," he said.

Although Trautwein's group favors scrapping the employer mandate entirely, he said the release of the forms will help retailers prepare to collect the coverage information next year. He said his understanding is that employers will collect data in 2015, report it in 2016 and pay any penalties that year.

The retailers trade group will scrub the forms and comment on them, Trautwein added, but he doesn't think it's too late for his industry to get the proper systems in place. In the notice on its website, the IRS said it expects to post the draft instructions that go with the forms in August, and that both the forms and instructions will be finalized this year.

"It's a bit awkward, but I think there is time for my members to prepare," Trautwein said, while noting that he has heard frustration over implementation and shared some of it. "I don't blame anybody for being mad at the delays."

Neblett said there is not much to the forms but that employers need technical instructions and specifications to get the system set up and understand how the information needs to be delivered. Beginning in January, she said, employers should be tracking the coverage information on a monthly basis and even the largest companies who hired additional programmers are not going to be ready by then.

"Our systems are not set up to track on a monthly basis," said Neblett, whose group also supported repeal of the mandate. "I know Treasury and IRS will say, 'Oh we're giving them 18 months.' Not really, they're giving us five months. That's when the tracking and the data collection has to start."

A Treasury spokesperson noted in an email that 96 percent of employers do not have to comply with the reporting requirements or the mandate because they have less than 50 employees. For the rest, the mandate requirements begin phasing in starting in 2015, but employers do not have file forms until 2016.

The spokesperson also said that reporting regulations announced in February significantly streamlined and simplified the process, particularly for employers that offer coverage that is very affordable. The simplifications include a single form for information reporting and an simplified option for employers, the official said.

The administration in February announced that employers with fewer than 100 workers will have an extra year—until 2016—to comply with the mandate. The rules change also said that employers will need to cover 70 percent of their full-time employees in 2015 and 95 percent of workers in 2016 and beyond.

The announcement came after the administration's initial delay in July 2013, when it announced that it would not enforce the penalties until 2015.

Beyond the regulatory process, a set of cases moving through federal courts could complicate the issue. Two federal appeals court panels released conflicting rulings this week about whether the health care law's subsidies to help people purchase coverage should be available on the federal insurance exchange. Since the employer mandate is linked to people receiving those subsidies, it could be affected.

Trautwein said those cases raise some questions about whether the administration might have to wait out the rulings. But it's still not certain there will be a conflict between the circuits, he said, or whether the Supreme Court would take up a review before next year.

Both Trautwein and Neblett also said they continue to be concerned about aspects of the employer mandate, including how seasonal employees are defined. They're expecting legislation to be introduced in the House next week to further clarify that issue.

The House Rules Committee is scheduled to meet this week to pave the way for floor consideration of a resolution (H Res 676) that would allow Boehner, R-Ohio, to sue the administration for not implementing the health law.

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