Early next year, some employers could potentially face the first fines for failure to comply with the coverage and reporting requirements of the Affordable Care Act. But Donald Trump’s election throws that into question.
The Republican president-elect had promised in his campaign to make dismantling the ACA one of his first acts upon taking office Jan. 20, but in recent days he has said he would consider keeping parts of Obamacare, including the provision prohibiting insurers from denying coverage based on pre-existing conditions.
With Republicans controlling Congress, Washington observers say the ACA will definitely change, but it’s not yet clear how much, when and what a replacement would look like. That makes it important for employers to still work toward compliance, experts said.
“I would never advise a company to fail to comply with federal reporting requirements,” said John Hudak, deputy director of the Center for Effective Public Management and a senior fellow at the Washington-based Brookings Institution.
While ACA will change under the new administration, “we just don’t know how much, if any, of ACA will remain and what the new system is going to look like,” he said, adding that a full repeal of the complex law would take time.
“Ten million people are getting subsidies through the marketplaces, and 20 million total are insured through the public marketplaces,” noted Ellen Feeney, vice president at Roseland, New Jersey-based ADP, which offers payroll, human resources and ACA compliance services.
Parts of the law could be repealed initially through budget reconciliation, which involves eliminating funding for key pieces such as Medicaid expansion and state exchanges, said Debra Sabatini Dwyer, a health economist at Stony Brook University. Lawmakers also could put employer penalties on hold rather quickly, or once again extend the deadline to comply with ACA, she said.
Still, she said employers shouldn’t take chances.
“Proceed with caution, but be in the planning stages” on compliance, she said. But she added there’s a good chance employers won’t face penalties.
Fines under the existing law could range over $2,000 per full-time employee.
To comply with existing reporting requirements, employers with at least 50 full-time workers must distribute forms to employees detailing their 2016 health insurance coverage by Jan. 31, said Steven Goldstein, an audit partner at Jericho-based CPA firm Grassi & Co. Coverage information must also be filed with the IRS, by Feb. 28 if filing on paper, or March 31 if filing electronically, he said.
He advised clients to meet those deadlines.
“The law is still the law right now,” he noted. “I’d plan to be compliant.”
Employers can’t just assume penalty notices won’t be issued, Goldstein said.
Dawn Davidson Drantch, corporate counsel for Farmingdale-based Alcott HR, agreed, adding: “While it is likely that the employer mandate may be repealed, or at the very least amended in some way, we do not yet know exactly what that will look like. As such, it is advisable to prepare as usual for the time being.”
That’s what Frank Scahill, managing partner of the Westbury law firm of Picciano & Scahill, is doing.
“We were preparing to comply with the existing law, and I don’t see any other option but to do that,” he said. The 100-person firm has spent more than $10,000 working to comply over the last two years, he estimated.
He views the money spent “as a normal course of doing business,” noting a repeal wouldn’t likely happen immediately because it would take time to rewrite the legislation.
And what’s the future for firms benefiting from offering ACA compliance services? They shouldn’t despair yet.
“The ACA will have to be replaced with something else,” Hudak said. “There will be some new compliance obligation.”
13 hours / $1,116
Estimated time and cost per month for small businesses to comply with the ACA
Source: National Small Business Association