Affordable Care Act: Employers

Affordable Care Act: Impact on employersThere are three matters affecting employers that are most likely to face elimination: the employer mandate, which fines companies of 50 workers or more that don’t offer health care benefits or offer benefits that don’t meet minimum requirements, taxes on certain high-cost (or Cadillac) health plans, and certain costly employer reporting requirements.

Under the ACA, employers with 50 or more full-time workers are required to offer health care coverage or face a penalty in excess of $2,000 for each employee. This would be an easy provision for Congress to repeal because most large employers already provide health insurance, and a repeal of this employer mandate would not be disruptive to the insurance industry. This also holds true for the penalty that applies if health care benefits don’t meet certain minimum requirements.

“Of all the repeals talked about, the employer mandate seems to be one that could go away quickly,” said Eddie Adkins, partner in the Washington National Tax Office.

Additionally, Congress could repeal the so-called Cadillac tax, designed to discourage employers from offering high-cost insurance plans. Set to take effect in 2020, the Cadillac tax would charge employers and insurance companies an excise tax if the value of employee health care coverage exceeded a certain threshold.

“Employers have been concerned about this tax because of the difficulty of projecting future costs of health plans given inflation and the likelihood of triggering the tax,” Adkins said. “It likely has no chance of surviving.”

Many companies also have had to spend more on technology and manpower to comply with IRS rules requiring employers to provide documentation of employee health insurance. “Congress could eliminate the reporting requirements, saving employers future costs,” Adkins said.