NEWS RELEASE

April 14, 2015
NR 2015-7

For additional information:
Jason Hammersla
office 202-289-6700 / cell 202-422-4652

Five years after enactment of PPACA …

Employer health plan sponsors urge measures to reduce financial, administrative burdens

WASHINGTON, DC — "The two House subcommittee hearings held today on the Patient Protection and Affordable Care Act (PPACA) underscore the continuing and emerging implementation challenges posed by the law as it turns five years old," American Benefits Council President James A. Klein said on April 14.

"Like most five-year olds, PPACA still needs direction," Klein said. Congress should fix what isn't working and help make the law more administrable."

PPACA's employer mandate, the subject of today's hearing in the House of Representatives Ways and Means Committee's Health Subcommittee, has imposed substantial financial and reporting burdens on employer plan sponsors. "Even now, five years after enactment, employers are scrambling to meet the reporting requirements mandated by the Internal Revenue Service," Klein said.

Similarly, as the House Education and Workforce Committee's Health, Employment, Labor and Pensions Subcommittee examines workplace issues raised by PPACA, lawmakers should be aware that aspects of the law have the potential for greater upheaval in years to come. The Council is particularly concerned about the implications of the 40 percent excise tax on high-cost coverage. It is scheduled to take effect in 2018 but has already compelled employers to reluctantly consider the type of changes to health plans that do not serve either the employer or their workers."

"Absent repeal or significant changes, the cost of a minimum value plan needed to avoid PPACA's employer shared responsibility penalties in some instances could exceed the excise tax thresholds, making health plan sponsorship untenable," Klein said.

To preserve the value proposition offered by employer-sponsored health plans, public policy must aim to reduce PPACA's burdens. The Council's long-term public policy strategic plan, A 2020 Vision: Flexibility and the Future of Employee Benefits, includes numerous recommendations for achieving a stable and efficient employer-sponsored benefits system. The following recommendations are especially relevant in light of today's hearings:

  • Repeal or modify the excise tax on high-cost health plans. The 40 percent excise tax must be repealed. Absent that, modifications could include more realistic indexing of the thresholds, only applying the cost of major medical coverage in determining whether thresholds are exceeded and establishing a safe harbor that excludes any plan below a certain actuarial level.

  • Allow flexibility in the application of the rules determining "full-time employee" for purposes of PPACA's employer mandate. Modifications are needed to minimize administrative burdens and compliance risk related to determining whether a worker is a "full-time employee," particularly with respect to employees who work a variable schedule.

  • Support workplace health wellness programs. One of PPACA's goals was to encourage employer-sponsored wellness programs. Federal agencies promulgating regulations should proceed in a consistent, collaborative manner to support participatory and outcomes-based wellness initiatives. (The Council recently testified on this topic before the House Education and the Workforce Subcommittee on Workforce Protections and the Senate Health, Education, Labor and Pensions Committee.)

  • Permit employers to establish stand-alone Health Reimbursement Arrangements - or similar accounts - that can be used to purchase individual coverage. Employers and employees could share financial responsibility for the account, providing another means to meet their respective PPACA obligations.

  • Repeal PPACA's automatic enrollment mandate. Mandatory automatic enrollment in benefit plans does not adequately take into account the challenges and cost burdens such requirements may pose. Mandatory auto-enrollment is not required in an environment where virtually all people must have health coverage and it is an inefficient use of resources to reach a comparatively small portion of the population.

"We recognize that PPACA remains a source of great division between Republicans and Democrats. Above all, employers are pragmatic and are faced with enormous compliance challenges right now. We urge Congress to preserve employer-sponsored plans through much-needed legislative changes to PPACA."

For more information on health policy matters, or to arrange an interview with Katy Spangler, senior vice president, health policy, please contact Jason Hammersla, Council director of communications, at jhammersla@abcstaff.org or by phone at 202-289-6700 (office) or (202) 422-4652 (mobile).

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.