Employer Groups Hope Congress Passes ACA Subsidy Clarification Bills

Employer groups are hopeful that Congress will use the lame-duck session to pass legislation to help prevent employees from incorrectly claiming health insurance subsidies in the Obamacare marketplaces.

An estimated 500,000 to 1 million employees may incorrectly claim subsidies through the Affordable Care Act marketplaces, even though their employers offered them coverage that meets the law’s definition of affordable coverage, according to the National Retail Federation and the Retail Industry Leaders Association. Trade associations, companies and health insurers are pushing for Congress to pass bipartisan bills, H.R. 2712 and S. 1996, which they say would help correct the problem.

The problem is many people may believe they are eligible for subsidies because they think the coverage their employers offer them isn’t affordable, supporters of the legislation say. But if employees receive health insurance subsidies they aren’t eligible for, they may have to repay about $5,000 in annual subsidies for individual plans and $12,000 in annual subsidies for family plans, the employer groups say.

`Strong Likelihood’ Bill Will Move

“I think there is strong likelihood that the Ways and Means Committee will move the House reporting bill during the lame-duck session,” Neil Trautwein vice president of health-care policy for the National Retail Federation, told Bloomberg BNA in an e-mail Oct. 24. The House bill is the Commonsense Reporting and Verification Act sponsored by Reps. Diane Black (R-Tenn.) and Mike Thompson (D-Calif.) A companion bill is the Commonsense Reporting Act sponsored by Sens. Mark Warner (D-Va.) and Rob Portman (R-Ohio).

The bills are “narrow, technical and bipartisan,” Trautwein said. “There is a good chance that the House will pass it during lame duck. Senate action could follow any number of paths but we are hopeful that this legislation will yet become law this year.”

“We are looking at the legislation,” Ways and Means Committee spokeswoman Lauren Blair Aronson told Bloomberg BNA in an e-mail Oct. 24. The Obama administration hasn’t issued a policy position on the bill because it hasn’t moved in Congress, spokesmen for the Department of Health and Human Services and a White House official told Bloomberg BNA.

Legislation Would `Help Reduce Confusion.’

The legislation would “help reduce confusion surrounding the Affordable Care Act’s (ACA) Exchange tax credit eligibility, and provide businesses and insurance carriers with regulatory relief under the law’s reporting requirements,” the ACA Reporting Task Force said in letters sent to House sponsors in July 2015 and to Senate sponsors in September 2015.

The ACA Reporting Task Force represents the trade associations and businesses supporting the legislation, including health insurer Aetna Inc. and America’s Health Insurance Plans.

The legislation would streamline the employer reporting process and strengthen the eligibility verification process for ACA premium tax credits and cost-sharing subsidies.

The bills are “a first step in providing individuals, employers, insurers, states, and the federal government with more clarity about who may be eligible for premium tax credits, and potentially minimizing the prospects of individuals being subjected by the IRS [Internal Revenue Service] to repayment of advanced premium tax credits or cost sharing subsidies in cases in which Exchanges made an incorrect eligibility determination,” the ACA Reporting Task Force letters said.

“The fear is that these individuals are employees who should have had their health-care coverage through the employer coverage, got exchange coverage, got a tax credit, and now may have to pay back that tax credit coverage,” Christine Pollack told Bloomberg BNA. Pollack is vice president of government affairs for the Retail Industry Leaders Association.

Employer Penalties

Employers with the equivalent of at least 50 full-time employees have been subject to the ACA’s employer mandate to provide affordable, essential minimum coverage. Those employers are liable to pay penalties of at least $2,260 per employee if any eligible employee receives subsidies through the marketplaces in 2017.

The IRS is in the process of reconciling subsidies paid to employees and information reported by employers concerning whether affordable, essential minimum coverage was offered, Pollack said. Employees who incorrectly received the advance premium tax credits or cost-sharing subsidies may be faced with repaying the subsidies for the first time when they file their tax returns in April 2017, Trautwein said.

While the legislation wouldn’t stop those tax bills from going out, “In theory Congress and the next administration could [provide] amnesty” to employees who are faced with repayments, Trautwein said. “I would encourage them to do this. It’s a complicated law and it’s not easy for people to navigate issues like affordability.”

No estimates are available as to the amount of incorrect premium tax credits, but the Senate Homeland Security and Governmental Affairs Committee said in a Feb. 8 report that as of June 2015 the Obama administration had awarded about $750 million in tax credits to people who were later determined to be ineligible.

The ACA marketplaces are supposed to send employers notices when employees receive the tax credits, but “the notices are spotty,” Pollack said. The federally facilitated exchanges, which are operating in 38 states in 2016, didn’t start sending the notices until June 2016 for people who received subsidies in 2016, and employers have no information from the federal exchanges for 2015 coverage, she said.

Among the 13 state-based exchanges,“A few states have sent out some notices,” but not all states have sent out the information, Pollack said.

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