Congressional Subcommittees Investigate ACA Employer Reporting and Individual Tax Credits

Yesterday the Health and Oversight Subcommittees on House Committee on Ways and Means conducted a hearing surrounding tax subsidies under the Affordable Care Act.  Health Subcommittee Chairman Kevin Brady (R-TX) and Oversight Subcommittee Chairman Charles Boustany (R-LA) convened the joint hearing to discuss the income verification system used to determine individuals’ eligibility for tax credits to purchase insurance, and to address reports of incorrect tax credit payments being issued and later reclaimed by the Internal Revenue Service (IRS).  The panel of witnesses included experts in health and tax policy including Douglas Holtz-Eakin, President of the American Action Forum and Katie Mahoney, Executive Director of Health Policy for the U.S. Chamber of Commerce.

Much like the sentiment towards the law itself, the views expressed in the joint hearing were split among partisan lines.  In opening remarks, Chairman Brady and Chairman Boustany expressed deep concern with the lack of accountability and efficiency with the current income verification system and eligibility requirements for tax credits.  Chairman Brady noted that, “Today, eight months after the start of open enrollment and well over a month after the extended open enrollment ended, the income and eligibility verification system is not completed.  And the burden and the cost of that failure will fall on the American people.  That is simply unfair and unacceptable.” Without proper income verification, individuals in some cases are receiving incorrect tax credits, which they are then required to repay months later when filing tax returns.  In order for the verification system to function correctly, massive amounts of data is required to be submitted by employers.  However, due to delays in the employer mandate, the regulations around employer reporting requirements have also been delayed.  During her testimony, Katie Mahoney from the U.S. Chamber of Commerce acknowledged that it is absolutely necessary for more flexibility for employers to come into compliance with the regulations of the ACA.

The International Franchise Association has submitted comments regarding employer reporting requirements to the IRS and Department of the Treasury as part of a coalition striving to increase flexibility for employers.  Accurate employer reporting is crucial to the success of other parts of the ACA, but it must be implemented responsibly and without disrupting employers who have already seen large cost increases because of the employer mandate to provide health insurance to employees.  In addition to pushing for changes to the definition of full-time employee, the IFA will continue to protect franchise business owner’s interests from the potentially harmful effects of the ACA requirements.

Employer Mandate Provides Relief for Some, But More Changes Still Needed

Yesterday, in addition to announcing the final regulations to implement the Affordable Care Act, the U.S. Treasury Department announced that it would delay some employer mandate requirements for some employers for one additional year.  Treasury had announced last July that it would delay the entire employer mandate until 2015 for all employers.  From Treasury’s fact sheet on the announcement:

“To ensure a gradual phase-in and assist the employers to whom the policy does apply, the final rules provide, for 2015, that:

  • The employer responsibility provision will generally apply to larger firms with 100 or more full-time employees starting in 2015 and employers with 50 or more full-time employees starting in 2016.
  • To avoid a payment for failing to offer health coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent in 2016 and beyond, helping employers that, for example, may offer coverage to employees with 35 or more hours, but not yet to that fraction of their employees who work 30 to 34 hours.”

In other words, employees with between 50 and 99 full-time equivalent employees will not be required to offer coverage to employees until 2016.  Employers with 100 or more full-time equivalent employees will only be required to cover 70 percent of their full-time workforce, down from the original requirement of 95 percent of full-time employees.  While this transition relief reflects a desire by the Administration to help businesses better implement the ACA, it does not go far enough to mitigate the enormous impact of the law on franchise businesses.  Small businesses with 50 full-time employees or more will still be forced to prepare to comply with the mandate towards the end of 2015.

Although IFA appreciates the partial delay, Congress can take action to effect more significant changes to the employer mandate that will benefit both workers and employers.  H.R. 2575, the Save American Workers Act, would restore the traditional definition of full-time employee in the ACA to 40 hours per week, up from the current definition of 30 hours.  The legislation recently added four Democratic cosponsors, Reps. Dan Lipinski (D-IL), Jim Matheson (D-UT), Collin Peterson (D-MN) and Kurt Schrader (D-OR) and now has a total of 201 cosponsors.  The House Committee on Ways & Means approved the bill on February 4 by a vote of 23-14, and it should receive a vote by the full House of Representatives in the near future.  We urge the House of Representatives to vote the Save American Workers Act as soon as possible.

Click here to take action by contacting your Representative to urge support for this crucial legislation.

House Committee to Consider Employer Mandate Fix

On Tuesday at 10:15am, the House Committee on Ways & Means will consider legislation that would repeal the 30-hour definition of “full-time employee” in the Affordable Care Act and restore the traditional 40-hour per week definition.  H.R. 2575, the Save American Workers Act, is sponsored by Rep. Todd Young (R-IN) and has 192 co-sponsors in the House.

The Committee held a hearing on the bill last week, where IFA member and multi-unit Marriott and Hilton franchisee Peter Anastos testified on the law’s impact on his business.  Although he plans to continue to offering coverage to his existing employees who work at least 30 hours per week, he said, that may change for new employees that he hires to staff the new hotels that his company, Maine Course Hospitality Group, will open in the next 18 months.

Asked by Rep. Charles Boustany (R-LA) about the constant stream of new regulations and delays associated with the Affordable Care Act, Mr. Anastos compared ACA compliance for small business to “trying to nail Jello to a wall.”  Although the Obama Administration announced a one-year delay of the employer mandate last July, the collective weight of new costs and regulations are enough to crush small businesses that are forced to offer coverage to full-time employees or pay tax penalties.  Asked by Rep. Boustany if his business is facing uncertainty as a result of the law’s implementation, Mr. Anastos bluntly replied, “that’s the understatement of the year.”  Click the thumbnail below to view a video excerpt from Mr. Anastos’ testimony.

To take action on this important issue by emailing your Representative, click here to visit IFA’s grassroots action center, www.FranchisingVotes.com.

Sen. Manchin Meets with Public on ACA Fix

 

 

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Earlier this week, Senator Joe Manchin (D-WV) visited a Burger King location in Vienna, West Virginia as part of a week-long tour of businesses in the state.  The meeting, attended by members of the business community and local elected officials, primarily concerned the need to reform the definition of full-time employee in the Affordable Care Act’s Employer Mandate.

Under the health law, employees who work an average of 30 or more hours per week are considered full-time employees, a number which bucks the long-time industry standard of 40 hours per week to qualify for full-time status.  Businesses with more than 50 full-time employees would either have to offer affordable health coverage or face hefty penalties.  The mandate’s additional cost burdens would have a devastating impact on small businesses, particularly those in the franchise community.

Matt Herridge of Charlton Management, the company that owns the Burger King location where the meeting was held, said that providing health coverage to employees not normally considered full-time would cost his business more than $6,000 per employee who received coverage.  The possibility of dramatically increased labor expenses is already forcing his business to weigh personnel management policy changes.

“If we start providing that to every single worker here, we would be out of business within a month,” Herrige told the Parkersburg News and Sentinel.  “Most businesses like us have cut folks back to under 30 hours. What we will have to consider later this year is whether we will follow suit or not.”

Sen. Manchin has taken leadership on this issue, cosponsoring S. 1188: the Forty Hours is Full Time Act of 2013.  The bipartisan legislation would raise the threshold for full-time status in the Affordable Care Act to the industry-standard 40 hours per week.  Companion legislation has already been introduced in the House as H.R. 2575: the Save American Workers Act of 2013.

IFA strongly supports efforts to reform the definition of full-time employee, and is working with its industry partners to ensure to legislators are fully aware of the challenges facing businesses struggling to comply with the Affordable Care Act.

For more information, please see this joint IFA and U.S. Chamber of Commerce on the impact that the Employer Mandate’s definition of full time has on businesses.

Capital Area Franchise Association Explores ACA Employer Requirements, Action Plans

The Capital Area Franchise Association (CAFA) held its monthly networking lunch this week that included an informative panel on the Affordable Care Act (ACA) and steps employer can take to prepare for compliance in 2014.  The overwhelming consensus: if you haven’t already started preparing, you should.

CAFA

CAFA, a network of franchisees and franchisors in the DC, Maryland and Virginia areas, hosted the event in Tyson’s Corner, VA and assembled a panel comprised of four unique perspectives.  A franchisee, a franchisor, an accountant and an insurance broker contributed to the panel to clarify some of the ACA’s more confusing provisions and describe what effective action plans look like.

Chris Frye, a Virginia-based CPA with Yount, Hyde & Barbour, explained that effective ACA planning involves making a string of strategic decisions, and that business owners should make these decisions while surrounded by trusted advisors.  Mark Carrier, President of the Maryland multi-unit hotel franchisee B.F. Saul Company Hospitality Group, added that no business will be unaffected the employer mandate.  Although some businesses may not be required to provide coverage to employees, every business will see changes to the way they operate.  CAFA President Joe Caruso stressed the need for prompt action on ACA compliance, with open enrollment for state exchanges beginning in October 2013.

As compliance deadlines approach, franchise owners need resources and materials to begin understanding how the employer mandate will impact their businesses.  IFA’s new website, www.MakingSenseofHealthCare.org, contains tools and information for employers to determine which aspects of the employer mandate they are responsible for complying with, testimonials from franchise industry leaders about how they are adjusting their business and workforce to comply with the law, and an interactive feature to chat with IFA government relations staff in real-time to answer questions about the law.  The site is sponsored by the Hylant Group.