The Employers for Flexibility in Health Care (E-FLEX) Coalition raised questions about the challenges that employers face in implementing the Affordable Care Act (ACA).
In a letter to Treasury Secretary Lew and Health and Human Services Secretary Burwell, the E-FLEX Coalition raised concerns from employers of all sizes across the country and emphasized solutions to minimize the number of employees who must repay advanced premium tax credits each year in order to ease the compliance burden on employers.
"Retailers have worked tirelessly with the administration on solutions to address the challenges this law presents for employers. With less than three months before the employer mandate goes into effect, significant issues and pertinent questions remain,” says Christine Pollack, vice president of government affairs at the Retail Industry Leaders Association.
“Employers are working to comply with the law and it is important that the administration do all they can to mitigate the upcoming challenges for businesses, employees, Exchanges and the IRS,” she says.
The E-FLEX Coalition, comprised of trade associations and employers in service-related industries, focused on four areas of concern in its letter: information reporting requirements, determination of employee eligibility for premium tax credits, the employer notification process when Exchanges has determined employees eligible for premium tax credits, and administration of advanced premium tax credits for 2015.
“As restaurants and the business community at large continue to navigate the health care law, employers face burdensome and confusing requirements to implement the law. Under the current reporting and notification requirements businesses will face exorbitant new HR and IT costs to obtain, maintain, and protect their employees’ personal information,” says Michelle Neblett, senior director of labor and workforce policy at the National Restaurant Association
“Employers have never needed to track such a massive outflow of employee data as the IRS is requiring, and from so many different sources. Streamlining the process through a prospective reporting system will help employees by providing more accurate information to the marketplaces as they evaluate individuals' eligibility for premium tax credits, which will lift the burden of compliance and help employers focus on growing their businesses and creating jobs,” she says.
In many cases, employers will have to build new systems and make significant investments to ensure that all of the data the IRS is requiring is being collected and reported. However, while the IRS has released the draft rules, forms, and instructions for the information reporting requirements, it has yet to release the technical specifications for employers to report the information electronically.
Given the complexity of the changes and build-outs this requires, businesses have to wait to incorporate this information before beginning work on the systems changes.
“It is irrational to think that employers- particularly grocery store operators who are currently focusing on what shoppers will buy for their holiday gatherings- are going to be able to stop what they’re doing, digest these draft forms and instructions, and configure a tracking and recordkeeping system that will be acceptable to the IRS in less than three months,” says Jennifer Hatcher, senior vice president, government and public affairs for the Food Marketing Institute.
“There needs to be a simpler option and a clear process to avoid a debacle for all involved—employers, individuals, Exchanges, and even the IRS,” she says.
When individuals apply for advanced premium tax credits on an Exchange, their eligibility is determined, in many cases, on tax information from two years prior. However, many employees have not had the same job for two years, and this approach could put many individuals at increased risk for having to repay part or all of their advanced premium tax credits when they file their tax return for 2014.
In the letter, E-FLEX recommends to Treasury and HHS that the determination of eligibility for advanced premium tax cuts be based on more accurate, up-to-date-information that employers voluntarily report.
This certification could improve the accuracy of initial eligibility determinations for advanced premium tax cuts and reduce the potential for individuals to be subjected to unexpected repayments of any tax credits for which Exchanges incorrectly deemed them eligible.