American Benefits Council
Benefits Byte

2014-031

April 9, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

Follow us on Twitter at @BenefitsCouncil

House Subcommittee Discusses PPACA Employer Mandate

The Health Subcommittee of the U.S. House of Representatives Ways and Means Committee discussed the employer mandate and reporting requirements of the Patient Protection and Affordable Care Act (PPACA) in a wide-ranging April 9 hearing. The subcommittee heard testimony from just one witness, J. Mark Iwry, senior advisor to the secretary and deputy assistant secretary for retirement and health policy at the U.S. Department of the Treasury.

As we reported in the February 10 Benefits Byte, the U.S. Treasury Department and Internal Revenue Service (IRS) released final regulations implementing the "Employer Shared Responsibility" provisions (commonly known as the "employer mandate" or the "pay-or-play mandate") under Section 4980H of the Internal Revenue Code, as added by PPACA. A Treasury Department fact sheet is also available, as is a Council Benefits Blueprint summary, prepared by Crowell & Moring LLP.

Generally, the employer shared responsibility provisions require employers to offer affordable, minimum-value health coverage to their "full-time employees" (defined as on average at least 30 hours per week) or pay a penalty, triggered when at least one full-time employee receives a premium tax credit to purchase coverage through a health insurance exchange. Employers that employed on average at least 50 full-time employees (or equivalents) on business days during the preceding calendar year are subject to the rules. These provisions were originally intended to be effective beginning in 2014, but Notice 2013-45 delayed implementation until 2015 and the final regulations effectively extended this delay to 2016 for companies with between 50 and 99 employees, subject to certain conditions.

Subcommittee Chairman Kevin Brady (R-TX), in his statement opening the hearing, argued that PPACA is likely to increase costs and administrative complexity for businesses. He also suggested that the regulatory process “is again raising the question of fairness. Why has big business received better treatment than individual Americans?” – a reference to the individual mandate that applies in 2014.

In his prepared remarks, Iwry walked the subcommittee through the employer “shared responsibility” provisions, and noted that the Treasury has worked with companies to simplify reporting requirements to make them more practical. Specifically, he noted, employers that self-insure will have a streamlined way to fulfill the information reporting requirements using a single consolidated form.

During the question-and-answer period, subcommittee Democrats and Republicans generally traded partisan arguments for and against the law. Most notably, in response to a question from Brady, Iwry stated that the Treasury would not have any reason to delay the individual mandate. Iwry also described the one-year moratorium on the employer reporting provisions as necessary, saying that it grants companies more time to gather information to make for an effective and smooth transition.

The Council continues to work with Iwry and other Treasury and IRS officials, as it has since the enactment ofPPACA,toaddress employer priorities asimplementation advances.For more information, contact Kathryn Wilber, senior counsel, health policy, or Diann Howland, vice president, legislative affairs, at (202) 289-6700.



Measure Clarifying PPACA Expatriate Plans Fails

The U.S. House of Representatives on April 9 failed to advance a bipartisan measure clarifying the treatment of expatriate plans under the Patient Protection and Affordable Care Act (PPACA). The vote tally was 257-159 in favor of passage, short of the two-thirds majority necessary to pass a bill under an expedited procedural process known as “suspension of the rules.”

The Expatriate Health Coverage Clarification Act (H.R. 4414), introduced with bipartisan co-sponsorship, seeks to exempt expatriate plans from certain key provisions of PPACA, including the law’s individual and employer mandates, health insurance taxes and other requirements. The health care law’s application to expatriate health plans – and to the employer sponsors and employees covered by such plans – has created compliance uncertainty among plan sponsors and caused them to consider obtaining coverage for their ex-pats from non-U.S. insurance carriers. Although some of the compliance uncertainty has been addressed in earlier transition guidance issued by the agencies, the guidance is temporary and does not fully address the outstanding concerns. 

The vote broke down generally along party lines, with only 20 Republicans opposing the bill and only 52 Democrats supporting it. (Notably, House Minority Leader Nancy Pelosi (D-CA) did not cast a vote.) Indications are that some Democrats were concerned that exempting expatriate plans would effectively allow for the provision of lesser coverage to foreign workers with jobs in the United States, such as migrant farm workers, although the language of the bill does not address that issue at all.

The Council had sent a letter to the Republican and Democrat leaders of the U.S. House of Representatives on April 8 expressing support for the measure.  The application of PPACA to U.S. insurance carriers that sell coverage for Americans working abroad makes those plans less competitive relative to plans being marketed by non-U.S. insurance companies.  The Council’s letter noted that many plan sponsors “rely on expatriate health plans to provide health benefits to meet the unique needs of [globally mobile employees] and their families. Multinational employers and their employees value expatriate health plans for a variety of reasons, including the role they play in recruiting and retaining a productive globally mobile workforce by ensuring coverage of their employees’ and families’ health care needs while abroad.”  Since the bill did receive a majority of votes, it is unclear whether its sponsors will try to bring it up again in the future under normal procedures.  If so, the bill might be modified to address concerns, including any possible concerns by U.S. insurance carriers that do not market expatriate health plans.

For more information, Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.



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.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).