Janet Trautwein, guest column
Washington, DC – Almost nothing has sparked so much partisan debate in Washington as the Affordable Care Act. The two parties have been going back and forth over the healthcare law for more than a decade.
So it’s encouraging to see lawmakers come together to support necessary administrative reforms to the ACA. Senators Mark Warner, D-Va., and Rob Portman, R-Ohio, and Representatives Mike Thompson, D-Calif., and Adrian Smith, R-Neb., have introduced the Commonsense Reporting Act of 2022 to streamline many of the ACA’s regulatory compliance requirements.
Their bill would save taxpayers, employers, and consumers time, money, and countless headaches.
To see why, let’s first take a look at the status quo. One of the key pillars of the Affordable Care Act is the “employer mandate,” which requires employers with 50 or more full-time employees to offer health insurance to at least 95% of those workers. Any company that fails to comply faces fines.
Complying with the mandate isn’t easy. Corporate health plans must conform to a raft of federal regulations. Crucially, those plans cannot cost workers more than 9.61% of their household income in 2022.
If an employee’s share of her health plan premium exceeds that percentage, the employer may face a fine. The employee, meanwhile, may become eligible for subsidized coverage through the ACA’s exchanges.
Lawmakers were trying to ensure that workers could afford the health plans their employers offered. But the income-based cutoff has created untold hassle for employers and employees alike.
Right now, employers report their health plan information to the Internal Revenue Service retroactively, in the following tax year. In other words, companies won’t file their compliance paperwork regarding their 2022 health plans until spring 2023.
This creates problems for employers and employees alike.
Say an employee with an offer of coverage through work decides to take a look at the health plans available through their state exchange or HealthCare.gov. Those online marketplaces ask shoppers whether they’ve received an offer of “affordable” coverage through work.
They may not think that the employer-sponsored coverage that’s available to them is “affordable.” But the government has a specific definition of “affordable.”
If they say that they were not offered affordable coverage — whether because they thought their employer’s plan was too expensive, or they preferred what was available on the exchanges — they could be subject to thousands of dollars in penalties.
Meanwhile, the employer may have to incur additional costs and stress responding to questions from the IRS about whether it has actually offered “affordable” coverage.
Today’s after-the-fact reporting system costs businesses and individuals billions of dollars each year. It’s so complicated that it has an 82% error rate.
The Commonsense Reporting Act would fix these problems by shifting to a prospective filing system. As the Congressional Research Service summarizes, the reform would allow “employers to voluntarily report information about their health plans for the current plan year prior to the beginning of open enrollment.”
That would enable employers and employees to have a better understanding of which workers qualify for ACA subsidies, which ones don’t, and which ones must be covered by employer-sponsored plans.
The bill would also reduce government waste by eliminating the additional paperwork, hours of labor, and redundancies. That means there’s effectively no cost to taxpayers.
The Commonsense Reporting Act is the rare bill that is a win-win-win for everyone involved: government, workers, and employers.
Janet Trautwein is CEO of the National Association of Health Underwriters (www.nahu.org). This piece originally ran in the Virginian-Pilot and Daily Press.