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Implications of the ACA Employer Mandate Delay: Q & A With Richard Stover

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Richard Stover, insurance specialist and principal at Buck Consultants, a Xerox company, has spent the last several days answering a barrage of questions from his employer clients about the one year Affordable Care Act Employer Mandate delay, announced in a White House blog Tuesday night.

Looming fines of up to $3000 per employee if a company fails to offer affordable insurance now won’t go into effect until January 2015.

Stover took a few moments to sit down with HealthBiz Decoded and talk about why this may be a reprieve for some employers, but not a get-out-of-jail-free card, as some believe.

Q: What does this change mean – is it positive or negative for employers?

A: For all employers it’s positive. For most employers who have some subset of their employees eligible in 2014, they would have been subject to penalties, and those penalties are being delayed for a year, so it gives employers more time to better understand the requirements and develop a compliance strategy.

It’s very good news for all of them.

Q: The White House released this update right before a holiday weekend, which many people interpreted as an attempt to bury it in the news cycle. Are there people out there who might be negatively affected by this delay?

A: The backlash I’ve seen from watching the news and reading reports is not coming from employers. The backlash is largely from Republican political groups who say this casts more doubt on the viability of the law as a whole.

I think there will be more pushback from people saying: you delayed the employer penalty, why are you not delaying the individual penalty? Why is that continuing to go forward?

Q: Does delaying the employer penalties put more pressure on the October 1st opening of insurance exchanges this year?

It would certainly seem to put more pressure on the administration, since now they’ve pushed back a big part of this law a year, do they now need to delay implementation of the exchanges or the implementation of the individual penalty?

Will the law even be enacted? The more they push it back, the more opportunity there is for Congress to change it.

Q: Some are worried that with no employer coverage available there will be even more people rushing to the state exchanges on October 1st, which had already been anticipating a flood of people. Is that a legitimate concern?

A: Yes. Actually in talking to a couple of the clients I work with this morning, one of their indirect concerns is that some employers already have a lot of employees with no benefits or very limited benefits as it stands now. With this delay, more of those people could go to the federal exchange and in 2015 those employers are more likely to get hit with penalties, with employees in the federal exchanges getting subsidies who might not want to come back to an employer plan.

That is a concern. There will be an increase in enrollment in the public exchanges.

Q: How do you think this is going to shake out in the next week or month?

A: I think there’s more news to come.

Initially, many employers may think more is being delayed than the reality. There are a number of benefit requirements to go into effect next year, limitations on waiting periods, dollar limitations on benefits, there are taxes that go into effect next year.

I think some employers are going to be disappointed. They’re happy with the part that has been delayed, but they’ll be disappointed on what aspects of the law aren’t being delayed. They’re still going to need to make changes in their benefit strategies and the programs they offer next year.

The other backlash you may get is on the individual penalty. Why is the administration still requiring individuals to go get coverage, and if they don’t they’re going to get a penalty? Why should corporate America get relief and individuals not, so I think you’ll hear more about that.

I would have expected, if you had called me a couple of days ago and asked what parts of the law could be delayed, I would have said the individual, not the employer penalties. It was a big surprise to many people, this delay.

Q: The White House has said we should expect more detailed guidance to come out within the week.

A: Just as an anecdotal thing, what we struggle with is all these rule changes tend to come out Friday afternoon or late right before a holiday, and I think sometimes there’s too much of an assumption that there’s some scheme behind it, so it doesn’t get as much publicity.

In reality, that generally is not the case. It’s the simple reality of employees wanting to get work done before leaving for the weekend and the holiday, so those deadlines become pressures.

Just conjecture on my part, but I don’t think there was any intent on the administration’s part to release this right before the holiday so it won’t hit the press… it certainly has hit the press regardless.

Q: What questions should people be asking that you haven’t heard yet?

A: Employers should be asking, what does this mean for their strategy for next year? Can they delay? What do they or don’t they need to change?

In the role I have at Xerox, meeting with a lot of different employers, there are a lot out there struggling with compliance and who if they continued ahead would probably not be in compliance with a lot of the parts of the law next year. Not because they were doing anything deliberate, but because the law and regulations are so complicated and so difficult to understand, there would be a fair amount of noncompliance just through ignorance.

This gives them more time to step back, think through their strategies and make sure they understand the requirements.

What I think many employers will be inclined to do, particularly now that they have the Supreme Court decision on DOMA to try to deal with too, is to say ‘good, we don’t have to worry about this until next year.’ That would be a mistake.

They’re going to need that time and hopefully they take advantage of it.

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