Effect of Delaying Employer Penalties under the ACA

The Treasury Department posted a blogpost late yesterday noting that it would (i) publish rules about employer reporting requirements later this summer and also (ii) delay the employer “shared responsibility” payments under § 4980H of the Internal Revenue Code until 2015 (as added by § 1513(a) of the ACA). For reference, IRC § 4980H imposes the $2,000/$3,000 penalty on employers with 50 or more full-time equivalent employees if the employees enroll in the ACA’s new premium assistance tax credits

Based on our understanding of the forthcoming guidance, Jackson Hewitt Tax Service notes the following potential effects of Treasury’s announcement:

• Fewer employers may cut employee hours in 2014. This one-year respite may make employers (e.g., restaurant and retail establishments) less likely to reduce employee hours below 30 hours per week (so as to classify such employees as part-time for § 4980H penalty calculations).

• Many families with children will have an unexpected benefit. For employers who offer employee but not dependent coverage, this one-year delay may also cause employers to postpone any offer of coverage to dependents. Interestingly, this may have a positive effect on such families for two reasons. First, children without an offer of employer-sponsored coverage may be eligible for the Children’s Health Insurance Program (CHIP) if they meet the state-specific income and other eligibility requirements. Second, children without an offer of employer coverage may be eligible for the new premium assistance tax credits in 2014 even if their incomes are above the state-specific CHIP limit. Indeed, 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 with certainty that they will not face a penalty in 2014.
  
• States may face less pressure from business interests to expand Medicaid. Jackson Hewitt had released a report earlier this year estimating that American employers would incur $876 million to $1.3 billion in penalties in 22 states that were refusing to expand their Medicaid programs as contemplated under the ACA. Today’s decision effectively removes that penalty liability for 2014. However, employers will continue to face such penalties in 2015 and thereafter in states that do not expand their Medicaid programs.
  
• The Treasury action today addresses anxiety among employers about the lack of final regulations from the IRS. While many employers with large part-time and seasonal employees embraced the flexibility afforded to them by the IRS’ proposed approach, they voiced increasingly loud concerns that the IRS had yet to finalize this approach in a final rule. Indeed, the IRS has not publicly pledged to finalize these proposed rules before the major provisions of the ACA take effect in 2014. In an unexpected development late Tuesday, though, the Treasury Department effectively moots this issue for 2014.

Jackson Hewitt also issued a statement today in response to Treasury’s announcement. “Today’s announcement from the Treasury Department alleviates several key concerns held by a large number of American employers that have a significant part-time and seasonal workforce,” said Brian Haile, Senior Vice President for Health Care Policy at Jackson Hewitt. “The federal approach acknowledges the challenges with implementing a policy that will affect so many employers – and strikes the right balance between speedy implementation and thoughtful policy-making.” Haile further noted that, “Notwithstanding the Administration’s announcement today, we continue to expect the launch of the health insurance marketplaces on October 1, 2013.”

Please feel free to contact us if we can answer any questions or be helpful in any way.

Brian Haile
Senior Vice President for Health Policy
Jackson Hewitt Tax Service Inc.

New Report Finds that the Affordable Care Act Will Spur Entrepreneurship

One benefit of the new health insurance options and reforms in the Affordable Care Act starting in 2014 will be the positive impact on the creation of small businesses and sole proprietorships. The new paths to health care coverage will allow more individuals to purchase their own coverage instead of having to be employed in order to receive health care insurance.

A recent report found that the Affordable Care Act is expected to produce a sharp increase in entrepreneurship next year, according to the analysis done by the Robert Wood Johnson Foundation, the Urban Institute and Georgetown University’s Health Policy Institute.

The number of self-employed people nationally is expected to rise by 1.5 million — a relative increase of more than 11 percent — as a direct result of the health care overhaul. One major barrier to entrepreneurship in the past in the United States has been the difficulty of getting health insurance on the individual market. A pre-existing condition or disability can make it very expensive and difficult – if not impossible – to purchase health insurance as an individual. Therefore, many people remain employed in a job that is not satisfying in order to maintain health care coverage – referred to as “job lock.” If health care is more portable, more employees will have the freedom to change jobs, retire and/or start their own businesses.

According to the report and this infographic, in Illinois, there are currently 475,000 people self-employed but there are expected to be 537,000 people self-employed after the ACA is implemented – an increase of 62,000 newly self-employed or 13.1%. This increase is due to the new options for health insurance outside of the traditional employer-employee relationship and the elimination of pre-existing condition exclusions in health insurance. The ACA will create insurance marketplaces in every state where individuals and small businesses can shop for insurance and compare insurance products as well as receive financial assistance if they are low income to defray the costs of premiums and cost-sharing.

In Illinois, health care reform implementation is proceeding with the creation of the new Federal State Partnership Marketplace to open enrollment on October 1, 2013 and to start providing coverage on January 1, 2014. Illinois also recently passed Senate Bill 26 to expand Medicaid under the ACA with the potential to cover hundreds of thousands of additional low income individuals. The bill is currently awaiting the Governor’s expected signature into law. Enrollment campaigns and education and outreach will begin in earnest in the summer. More information on the Illinois effort to implement the ACA can be found at: http://www2.illinois.gov/gov/healthcarereform/Pages/default.aspx and at www.illinoishealthmatters.org.

Stephanie Altman
Health & Disability Advocates

Illinois Senate Moves Towards Passing State Based Health Insurance Marketplace

In passing HB3227 (formerly SB34) today, the Illinois Senate took a major step in establishing a state based health insurance marketplace that helps small businesses and individuals in Illinois.

State Senator David Koehler (D-46 Peoria), chief sponsor of SB34 (now contained in HB3227) commented after the vote, "I am pleased that a super majority of my colleagues in the Senate voted for Illinois to establish its own state health insurance marketplace. Expanding help and providing a voice for small businesses and individuals who will be utilizing the new Illinois Health Insurance Marketplace is the intention of the Affordable Care Act, and I am proud that the Illinois Senate has made that commitment."

Brigid Leahy, Director of Legislation at Planned Parenthood of Illinois, said, "If we're running things at the state level, we can fix things, we can make them better, we have better control over making sure that it works for consumers. If it’s in the hands of the feds, we don’t have that power."

HB3227 establishes a pro-consumer and pro-small business health insurance marketplace in Illinois. The health insurance marketplace will be the one-stop insurance shop for more than a million Illinoisans.

Speaking on behalf of the Illinois Public Health Association, Tom Hughes said, "The diversity of this board will best represent the population of Illinois and protect consumers in the new marketplace."

HB3227 ensures that the marketplace is governed by a diverse board that represents women, small businesses, communities of color, labor, public health, people with disabilities, and consumers, and provides for accountability of the insurance industry selling plans on the new marketplace.

Jim Duffett, Executive Director of the Campaign for Better Health Care, said, "This historic vote by the Illinois Senate today shows the Senate's commitment to Illinois small businesses and individuals who will be eligible for the new Illinois health insurance marketplace. When fully implemented nearly 1.2 Illinoisans will be utilizing this marketplace. HB3227 will provide small businesses and consumers a direct voice in developing and implementation a State Based Marketplace that meets the needs of Illinoisans. Now it is up to the Illinois House to show their commitment and support to small businesses and individuals, and to President Obama's Affordable Care Act."

ADDENDUM
HB3227 Fact Sheet

Media Contacts:

Jim Duffett, CBHC Executive Director
217.352.5600 office / 217.840.5850 cell

Kathleen Duffy, CBHC Communications Director
312.913.9449 office / 773.934.4754 cell

Visualize It!

For the second consecutive year, Health & Disability Advocates (HDA) has released its Visualizing Health Care Reform tool, a unique, interactive map that allows users to see a geographic and demographic breakdown of uninsured state residents who will be eligible for healthcare coverage when the Affordable Care Act (ACA) is fully implemented beginning in 2014.

The visualization is an especially practical tool for groups in the public, private and non-profit sectors, who are planning how they will meet the demand for information and for assistance to connect individuals with the new health care options. The interactive map allows users to pinpoint data for 87 Illinois communities, or roll up to larger regions around the state. The latest release of the tool provides geographic and demographic breakdowns of those who will become eligible for coverage in Illinois, as well as the undocumented non-citizens who do not have a new path to coverage.

The AP covered the tool yesterday and focused in on the over 40,000 uninsured veterans in Illinois - 32% (13,000) of whom will be newly eligible for Medicaid in Illinois, as long as the Medicaid expansion passes the legislature.

HDA CEO, Barbara Otto, was featured on WGN News illustrating how to use the tool.

With Visualizing Health Care Reform, we hope to help build an on-ramp to affordable health care for eligible individuals and families while also helping those on the implementation side to plan for a smooth and effective transition.

Please share the tool with your networks and email us if you have questions!

A Simpler Way to Apply for Health Care

By Kathleen Sebelius, Secretary of Health and Human Services
Posted April 30, 2013

Today, we take one more step toward meeting the promise of helping millions of Americans access quality, affordable health coverage.

We have finalized the application you can complete later this year to learn what health insurance programs you are eligible for and the discounts to help pay for it. Starting in October, it will be the one application you can use to apply for the new Health Insurance Marketplace, Medicaid, the Children’s Health Insurance Program, and tax credits that will help pay for premiums.

I’m also pleased to say the application has been simplified and significantly shortened. The application for individuals is three pages, and the application for families is reduced by two-thirds, to seven pages. This is much shorter than industry standards for health insurance applications today.

Whether you choose to use this application to apply for coverage online, by phone, or on paper, the Health Insurance Marketplace will give you better options than they have today – with one destination to apply and many resources to get help. In-person counselors and a toll free phone line will be available to help you through every step of the process.

The online application that will go live on Healthcare.gov when the Health Insurance Marketplace opens for enrollment on October 1, can be found here: http://cciio.cms.gov/resources/other/index.html#hie

You can sign up to learn more and get ready to enroll at signup.healthcare.gov.

(This post was originally on the healthcare.gov blog here).

Setting the record straight on health law’s delayed small business features

The Department of Health and Human Services’ proposal to delay critical requirements for small business health insurance exchanges in some states is a disappointment to Small Business Majority and millions of small businesses. It’s a letdown to small business owners and their employees looking forward to robust, competitive exchanges in 2014. We hope this proposal is recognized as counterproductive and is abandoned. 

That said, there’s a tremendous amount of misinformation circulating about what the rule would actually mean. We want to set the record straight.

What the Rule Would Do
The proposed rule would delay two features of small business exchanges in some states until 2015. It would not delay opening of the exchanges themselves. Exchanges will still open Jan. 1, 2014.

The rule would mean that in some states, two features of the exchange won’t be implemented: 1) employee choice and 2) premium aggregation. These are wonky healthcare terms, but the impact their delay would have is fairly straightforward. Stalling employee choice means small employers will have to wait until 2015 to be able to offer workers an array of health plans to choose from. Delaying premium aggregation means an administrative function that would simplify the payment process for employers also won’t be available for a year. The two features are linked—premium aggregation is not needed without employee choice.

The Facts
Exchanges still open; small businesses still have more than one plan option
What the rule would not do—despite a multitude of reports saying otherwise—is strip small businesses of any coverage choice whatsoever, essentially forcing all small business employers and their workers into one health plan.

Indeed, word on the street is that all small businesses that enroll in exchanges will have access to only one plan. Some reports have even gone as far as saying this plan will be government-run. Neither one of these is true.

Multiple private plans still available
Whether the rule is finalized or not, come 2014, two things will be true: there will be a full array of private health plans offered through the small business exchanges, and employers will be able to choose a plan from them. Their employees can then decide whether to enroll in it. This is essentially how the small group market works right now. What the rule means is that employees themselves will not have a menu of plans to choose from until 2015—which is a new benefit the law provides for small businesses.

Only applies to certain states
It’s also important to note the rule requires only states that have federally facilitated exchanges to delay these features a year. Federally facilitated exchanges are those created by the federal government in states that haven’t chosen to create them on their own. The 17 states implementing their own exchanges can still extend employee choice and premium aggregation to their customers starting in 2014. Nearly 40% of small businesses in this country do business in the 17 states implementing their own exchanges. That means there will be employee choice among health plans for those businesses next year—if their states choose to give it to them.

No impact on self-employed
What’s more, delaying this rule does not impact America’s 22 million self-employed individuals, nearly 30% of whom are uninsured. As planned, these entrepreneurs will still be able to purchase insurance through the individual exchanges in 2014—a huge boon to owners who have struggled to purchase affordable insurance for decades.

The Bottom Line
While certainly disappointing, delaying employee choice and premium aggregation is not the end of the world. Starting next year, small employers will still be able to pool their buying power in the exchanges, giving them the kind of clout large businesses currently enjoy. They’ll still get administrative help and, in many places, will have more choices of plans than they currently do. All the original features of exchanges will go into effect in 2015.

Small Business Majority has been talking to real small businesses across the country since the law was passed three years ago. We know they like the features of the exchange that could be delayed, along with other key provisions including: 1) being able to pool their buying power; 2) the Medical Loss Ratio provision requiring insurers to spend 80% of premium dollars on care; and 3) the preexisting condition ban. Our national opinion polling further underscores this.

We hope the proposed rule isn’t finalized, because small businesses nationwide are looking forward to employee choice and premium aggregation. Nevertheless, these features will still be in the exchanges in 2015—albeit a year late.

John Arensmeyer 
Founder & CEO, Small Business Majority



(This post was originally posted here on the Small Business Majority blog)

Obamacare Enters Its Big Year for Fighting Poverty

Obamacare, the Affordable Care Act (ACA), had its third birthday over this past weekend. So this is its first work week in its most important year. This is the year for the ACA’s heavy lifting, bringing affordable health coverage to 36 million uninsured Americans and ending discrimination against adults with pre-existing conditions, all effective as of January 2014. This is the year that the ACA becomes the biggest single measure in the fight against poverty in the last 50 years.
 
The ACA, of course, is usually discussed in terms of its impact on the health care system. And it is already doing a significant job on that front. In its birthday editorial, the New York Times aptly summarized the important contributions to reform of the health care system that the ACA has already produced:

• 6.6 million young adults covered through their parents’ health insurance (3 million of whom were previously uninsured);
• 71 million Americans received at least one preventive care service without co-payment (including 34 million older adults through Medicare);
• 17 million children protected from discrimination by insurance companies due to pre-existing conditions;
• 3 million more patients served by community clinics due to ACA-funded expansion;
• private premium increases dramatically slowed and $1.1 billion refunded to customers due to the ACA’s limit on premiums;
• 6.3 million seniors saved $6.3 billion in spending on drugs as the ACA fills in the notorious “donut hole” co-payment requirement in Medicare;
• growth of the overall cost of the health care system dramatically slowed; and
• promising improvements in health care quality. 

That is a substantial list of accomplishments; moreover, the health care system is due for its most important improvements in the coming year. The upcoming big changes, however, will have an impact that should be understood in more than just health care terms. The progress that will be made in the fight against poverty will be truly remarkable.  

Half of the gain in covering the uninsured will be directed at people in the deepest poverty in our country. Since Medicaid began in 1965, it has had a gap. It never offered coverage to people aged 19-64 who are not officially disabled and not caring for a child in their home. 

These are young adults leaving high school or college (whose parents do not have employer-supported coverage); empty nest parents whose children are over 18; tens of thousands of veterans not covered by VA health programs (over 12,000 would gain Medicaid coverage just in my home state of Illinois); chronically unemployed people with serious mental and physical impairments who are not officially disabled; many of the homeless; and others. The ACA will fill that gap in Medicaid , providing coverage to all with income under 138% of the Federal Poverty Line ($15,415 per year for an individual and $26,344 for a family of three) in the states that choose to take the federal money that the ACA offers them to pay for it.

For many people in poverty, health coverage not only means health, reduction in pain, and expansion of life expectancy, it also means employability and productivity and upward mobility. It can improve learning capacity. It reduces family stress. It can be a major factor in reducing family and community violence. It is a vast improvement in quality of life and quality of opportunity.

The ACA also ends the high cost for Medicaid beneficiaries of making more money. Currently, when a Medicaid beneficiary succeeds in the workplace and escapes poverty, there is a penalty: the loss of health coverage when earnings exceed allowed Medicaid levels. Starting in January, though, the Healthcare Marketplaces in every state will offer affordable private insurance coverage to replace Medicaid when earnings call for termination of Medicaid eligibility. This private coverage removes a barrier to upward mobility. It also acts as a net to keep workers in the middle class if they lose employer-supported insurance, when a health emergency might otherwise mean a free-fall into poverty. And it is there to provide coverage for budding entrepreneurs who want to try for the American Dream and start their own businesses, but who currently are blocked because they cannot risk losing either Medicaid or employer-supported coverage.     

Obamacare already fights poverty by helping seniors on Medicare make ends meet and by helping young adults make their way in the workforce by staying on their parents’ insurance. And in the coming year, at least in the states that implement it thoroughly, Obamacare will make its biggest inroads against poverty.  

John Bouman
President, Sargent Shriver National Center on Poverty Law

(This guest blog was originally posted here in the Shriver Brief) 

Sign On in Support of SB 34 - A State Run Exchange in Illinois

Illinois Senate Bill 34 establishes a robust, pro-consumer and pro-small business Health Insurance Marketplace in Illinois. The Health Insurance Marketplace will be the one-stop insurance shop for more than a million Illinoisans. SB34 ensures that the Marketplace is governed by a diverse board that represents women, small businesses, communities of color, labor, public health, people with disabilities, and consumers.  It is scheduled to be heard in subcommittee of the Senate Executive Committee today.

Please help signal broad support for this important health care bill by taking these 2 actions:

1. Sign on to the list of organizations supporting SB34

Click here to add your organization to the list of supporters for the passage of SB34.

2. Call the toll-free Marketplace Action line, 1-888-801-4426, and ask your state senator to cosponsor SB34!

If your state senator is already a cosponsor, please call him or her to thank them for their support. Here are the current co-sponsors:


David Koehler, Heather A. Steans, Don Harmon, Toi W. Hutchinson, William Delgado, Jacqueline Y. Collins, Michael Noland, Emil Jones, III, Julie A. Morrison, Steven M. Landek, Dan Kotowski, Patricia Van Pelt, Iris Y. Martinez, Mattie Hunter, Kimberly A. Lightford, Daniel Biss, Ira I. Silverstein, Thomas Cullerton, Terry Link, Melinda Bush, Donne E. Trotter, Bill Cunningham, Kwame Raoul, Napoleon Harris III

Please especially ask Senators Trotter and Clayborne and members of the Senate Executive Committee to pass SB34 out of committee.

SB34 must first pass out of the Governmental Operations Subcommittee and then the Executive Committee before going to a full vote.

Advocacy Materials:

You can find these materials and many others on our Health Insurance Marketplace page:

•     SB34 Fact Sheet
•     Health Insurance Marketplace Q&A
•     State Senator Co-sponsorship Form
•     Template for Co-sponorship request letter to senator
•     Template for Co-sponorship thank you letter
•     Multiple briefing resources

Jim Duffett
Campaign for Better Health Care