Obamacare Update...

HONOR SYSTEM FOR SUBSIDIES.... REALLY!!!! + EMPLOYER MANDATE PENALTY POSTPONED

On July 2nd, the U.S. Treasury Department surprised many by announcing that the "employer mandate" would be delayed until 2015. In addition, a separate delay that received less coverage 

was contained in a lengthy regulation also released on Friday that loosens the verification of individuals' eligibility to receive government subsidies to purchase private insurance through the new health insurance marketplaces for 2014.

The Administration framed the decision as a delay in the enforcement of the mandate, its reporting requirements and 

subsequent tax assessments for "large" employers who do not provide adequate or affordable health care. In other words, the employer mandate is still technically on the books, but there is no penalty for noncompliance for 2014 only.  

The employer mandate was designed by the authors of PPACA both as a backstop to the individual mandate and to prevent the erosion of the employer-based health care system. The mandate requires employers with 50 or more employees to provide coverage of at least a 60% actuarial value (equal to a bronze level plan on the exchanges) and for coverage to be affordable (premiums no greater than 9.5% of employee's income). Since the individual mandate will still be in place on Jan. 1, 2014, this move by the Administration is seen by some observers as not significantly impacting implementation of the broader law. Furthermore, many larger employers will likely be grateful for the additional time 

for compliance.

On the other hand, the delay could boost initial enrollment through the exchanges as many larger employers already interested in moving in this direction will not be assessed a penalty for 2014. Along these lines, many experts worry that this move by the Administration could also undermine the employer-based system 

of health care. This is of particular concern to independent insurance agents and brokers.

Another PPACA delay was announced Friday in a 606-page regulation publication, which says that the federal government will not be verifying individuals' eligibility to receive subsidies through 

the new health insurance marketplaces for 2014.

These subsidies will be available to individuals earning between 100% and 400% of the federal poverty level in order to assist with the purchase of private health insurance through the exchanges. 

The Administration has said it will be conducting random checks to verify income status, but essentially will almost entirely rely on an "honor" system and self-reporting in all 50 states for the first 

year the marketplaces are open.

Additionally, the regulations spelled out a further delay in that the 17 state-run marketplaces will not be required to verify that a consumer does not receive adequate health insurance from their 

employer. This will further affect how many individuals receive subsidies, since only individuals who do not have access to adequate coverage through their employer may enroll in plans via exchanges and potentially receive subsidies.

Andrew Darlington CRM, CIC, CBIA, AAI

Veritas
Risk Management & Insurance Services

PO Box 4539
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