Time to Rethink the Employer Mandate
(c) Dwight Nadig
There’s a lot of buzz about efforts on Capitol Hill to repeal the employer mandate. I have to agree with Jim Klein of the American Benefits Council, who is quoted in this New York Times article, that the individual mandate and the employer mandate are entwined, and that if you repeal one, you should repeal the other.
Employers would like to see the employer mandate repealed -- but not for the reason everyone thinks. Employers provided coverage to almost exactly the same people before the ACA as they did post-ACA. (The only real additions to their plans were dependents up to age 26.) However, repealing the mandate would bring about two changes that employers would appreciate: Greater plan design flexibility and relief from the reporting requirements. Neither would result in significant change in the numbers of people with access to employer-sponsored coverage or qualifying for a government subsidy on the health exchange.
We have seen a few of the penalty letters sent to employers the IRS believes have failed to comply with the mandate. So far, the biggest issue appears to be reporting errors. It’s not that employers failed to make the offer of coverage, but rather that there were coding errors in how coverage was reported. The reporting requirements have been burdensome to employers. Many companies had to contract with a vendor to consolidate their data and complete the reporting for them, adding expense and additional administrative burden.
Relief from these ACA requirements would be welcomed by the many committed employer health plan sponsors that provide health insurance to 178 million Americans today.