Business Organizations

ACA “repeal” proposals at this point seem like zombie extras – walking dead, and none of them purports to repeal employer mandate taxes that accrued in 2015. Collection is coming; only the timing is in question.

ACV 2.0 is the program designed in 2015 to enable the IRS to identify, starting in early 2017, non-compliant Applicable Large Employers.  The April 7, 2017 report of the U.S Treasury Inspector General for Tax Administration (TIGTA) included this summary of its status:

[I]mplementation of the ACV system has been delayed to May 2017. IRS management indicated that the delay is due to incorporating new requirements into ACV system development to address data inconsistencies, i.e., TY 2015 Forms 1094-C and 1095-C containing errors, missing entries, and contradictory form entries. As a result, the IRS is now having to develop an automation tool outside of the ACA system in an attempt to identify the Applicable Large Employers subject to the § 4980H(a) Employer Shared Responsibility Payment. IRS management advised us that as of January 18, 2017, the IRS was testing the automation tool that it developed and planned to deploy it by March 2017.

IRS management also explained that a lack of funding has resulted in the IRS not developing ACV capability to identify Applicable Large Employers not filing Forms 1094-C and 1095-C as required, i.e., nonfilers, or to identify the Applicable Large Employers potentially subject to the Employer Shared Responsibility Payment for offering health insurance coverage in TY 2015 that did not provide minimum value or was not affordable, i.e., § 4980H(b). Management further noted that the complexities associated with developing the programming requirements associated with the § 4980H(b) provision continue to be a challenge. As a result, IRS management indicated that they are also planning to develop an automation tool to identify nonfilers and Applicable Large Employers subject to the § 4980H(b) Employer Shared Responsibility Payment. IRS management advised us that as of January 18, 2017, the IRS is testing the automation tool that it developed and is planning to deploy it by March 2017. As part of our ongoing ACA audit coverage, we will evaluate the effectiveness of the new automation tools and eventual implementation of the ACV system.

ACV 2.0 was designed as a companion to an “ACA Case Management” system that was cancelled in June 2016 after about $7M of sunk development cost.  Cancellation was related to development of an IRS-wide Enterprise Case Management system, about which the TIGTA report said:

The ACA Case Management system functional components are being transferred to the Enterprise Case Management system. On November 4, 2016, IRS management explained that it plans to use an existing document control system to provide the needed case management capabilities, including establishing manual processes for working the Employer Shared Responsibility Payment cases, as an interim alternative until the Enterprise Case Management system can provide case management for ACA-related compliance activities. As part of our ongoing ACA audit coverage, we plan to evaluate the IRS’s efforts to implement processes to ensure Applicable Large Employer compliance with the Employer Shared Responsibility Provision and assessment of the Employer Shared Responsibility Payment.

(Emphasis ours.)  So, is ACV 2.0 ready for roll-out?  And will employer mandate tax enforcers have ECM tools, or will they be using manual processes to generate and follow-up on letters notifying suspected ALEs of suspected employer mandate non-compliance?

Many such letters may be entirely accurate and timely, but neither should be assumed by the recipient.

 

The hero has disappeared in a cloud of suspicion and is presumed dead, so much so that supposed friends are found to be celebrating his passing.  This is just as it should be at the end of Act II.  Remember when Republicans rejoiced over the apparent abandonment of H.R. 3200 in October 2009?  It furnished the foundation for H.R. 3590, which became Public Law 111-148 (one of the two statutes that comprise the ACA) in March 2010.  Capitol Hill is short on many things, but there are plenty of plot devices available to move this story forward before the elections in November 2018.  Passing the 2015 partial repeal bill again soon probably is a long shot.  But ACA subsidies may seem less sacrosanct after ACA taxes really begin to bite in early 2018, and ACA architects may rue their decision to give the HHS Secretary such wide discretion to grant § 1332 waivers.

When lawyers talk about “waivers,” we normally have in mind contracts to surrender certain legal rights in exchange for something else deemed more desirable.  Section 1332 waivers are something entirely different.  Codified as 42 U.S.C. § 18052, this ACA text empowers the Secretary to approve state plans to alter, and perhaps dispense with, these ACA provisions, for up to five years:

  • ACA § 1301-1304 (including “essential health benefits” and “qualified health plan” definitions);
  • ACA § 1311-1313 (state-operated ACA Exchanges);
  • ACA § 1402 (cost-sharing subsidies); and
  • Code § § 36B (premium subsidies), 4980H (employer mandate) and 5000A (individual mandate).

The Secretary may grant a state’s waiver request only after finding that it would achieve at least equivalent coverage and cost-sharing protections without increasing the federal deficit.  But the ACA also required the former Administration to do things that it didn’t do, and to enforce things it didn’t enforce.  Employer mandate taxes were to accrue beginning in 2014.  There was no “transition relief.”  The ACA killed so-called “grandmothered plans” outright.  Those and many other politically problematic dictates were delayed, ignored or amended administratively, sometimes very informally. We won’t be surprised if this Administration uses § 1332 waivers to allow states to “fix” perceived ACA problems that can’t or won’t be fixed by Congress.

Of course, facile findings made to facilitate waivers would provoke years of litigation ending with Supreme Court pronouncements… after November 2018 …maybe after November 2020.  So maybe we should discount that possibility.  [Insert your preferred emoji here.]

Update:  Well, that accelerated quickly.  The Senate Budget Committee web site now features a link to an 18-page draft bill called The Obamacare Repeal Reconciliation Act of 2017.  Here are highlights of what seems clear on first reading.  The bill appears to –

  • Uncap the recapture of excess premium tax credit payments;
  • Terminate at the end of 2019 the ACA’s small business tax credits, premium tax credits and cost sharing payments, while expressly authoring cost-sharing payments to be made through 2019;
  • Set the individual mandate and employer mandate taxes at $0, retroactive to January 1, 2016;
  • Defund Planned Parenthood for one year, offset by boosting Community Health Center funding by $422M;
  • Phase-out Medicaid expansion;
  • Repeal DSH payment reductions;
  • Suspend Cadillac plan taxes until 2026;
  • Repeal taxes on over-the-counter medications, repeal the prescription medicine tax, repeal the medical device tax, the tanning tax and the health insurance tax beginning January 1, 2018;
  • Repeal the net investment tax retroactive to January 1, 2017;
  • Repeal FSA contribution limits beginning January 1, 2018;
  • Authorize $1.5B of new anti-addiction spending in FY2018-19.

This is the simplest, skinniest health care “repeal” bill you are likely to read, so you should.

 

The pundits and political partisans apparently stopped reading before the heading on page 9 of the CBO’s June 26 report on the Better Care Reconciliation Act (BCRA) Discussion Draft, “Uncertainty Surrounding the Estimates,” which the CBO conceded to be “inherently inexact,” given the complexity of possible reactions to BCRA passage.  Going further, the CBO disclosed that its estimates are based on a March 2016 baseline that materially overstated ACA Exchange enrollment and underestimated average subsidy payments per enrollee. In short, the CBO is confident of the direction that BCRA would push health care markets, but not of the magnitude of any move in any market.   So if you read or hear that BCRA “will” do this or that, rest your eyes or ears.  Here’s what we found interesting in the CBO report.

Turn all the way back to Table 4, three pages from the end. By the end of 2018, compared to the ACA projection (using the 2016 baseline analysis) about seven million fewer will have individual policies if BCRA passes.  The report cites two main reasons:  many who don’t want to buy insurance won’t buy it once the individual mandate vanishes and some who do want it won’t be able to afford it because subsidies will be less generous for those just above the Medicaid eligibility line and we mature Americans will pay more of our true cost.  Medicaid rolls will be slimmer by about four million people, mainly due to the lack of new states expected (in 2016) to adopt Medical expansion and the reduced federal funding of expansion.  Employers will drop coverage for about four million, because there will be no employer mandate.  The aggregate spread, fifteen million, is projected to rise to twenty-two million people by 2026, with Medicaid restraint accounting for fifteen million and individual policy purchases accounting for seven million of the spread. Between 2018 and 2026, the total under-65 population will rise from 274 million to 280 million (2.5%), with the uninsured population rising from 26 million (9.5%) to 49 million (17.5%).  The newly uninsured would be concentrated among those not yet eligible for Medicare and not poor enough for Medicaid.  However, the analysis ignores insurance that would not qualify for sale on an ACA Exchange today.  Some number of the “uninsured” would purchase hospital indemnity plans, catastrophic coverage, skinny med plans, etc.

The report acknowledges that BCRA imposes a six month waiting period for individual market applicants who have allowed coverage to lapse, but it’s not clear how, if at all, CBO considered that to offset the consequences of individual mandate elimination.

According to the CBO, BCRA would free-up about $321 billion of budgetary capacity. The report does not consider the extent to which job gains incident to related tax reform could boost employer-provided coverage.

What insureds pay would rise in the short term, CBO predicts, largely because the demise of the individual mandate would allow relatively healthy people to leave the market without tax penalty. Other factors could include states using § 1332 waivers to drop expensive treatments from Essential Health Benefits. But by 2020, that trend would reverse, and insureds would pay less than under the ACA, left unchanged.

There’s much more worth reading; it’s quite educational, but maybe not prophetic.

Many other things being equal, the longer the sail boat, the faster it can go before its bow wave defeats further speed increase.  However, as any boat approaches its “hull speed,” an increasing amount of energy is required to add each new increment of speed.   And so it is with health insurance.

When all parties in a debate cite the same figures, don’t bother arguing with the numbers.  So let’s assume that about forty cents of each health care dollar goes to care for people with multiple, chronic conditions and that about 5% of the insured population accounts for about 50% of health care costs.  If the insured population’s median age is rising then, other things being equal, those numbers will not improve in the near term.

In a fully free market, many mature Americans (like your humble correspondent) would be uninsurable.  That being politically unpalatable, the federal government since HIPAA has made it increasingly difficult to exclude us from insurance pools.  The ACA virtually outlawed it. But, like a boat approaching its hull speed, a scheme of health care financing that transfers dollars from the healthy to the unhealthy will need an increasing number of dollars for each added increment of coverage of the increasingly unhealthy.  The ACA approach is minimum standard coverage for all at any cost.  Any sincere attempt to stabilize insurance markets and lower premiums and deductibles for the 95% would have to exclude some of the 5% from those markets.

So what does the Senate bill do?  Not much.  The term “pre-existing” does not appear in the bill.  No health status discrimination prohibition is repealed and a new one is added, to prevent Small Business Health Plans from paying eligible bad risks to enroll in individual coverage.  Simply put, the Senate decided to punt.  So did the House, but the House punted to the states, which were given a bigger role in striking this balance.  Those express, direct provisions are missing from the Senate bill, so the question is what it allows implicitly and indirectly.

Section 106 appropriates $50B for 2018 through 2021 for CMS to use to, among other things, assist participating health insurers and states to “provide financial assistance to high-risk individuals … who do not have access to health insurance coverage offered through an employer, enroll in health insurance coverage under a plan offered in the individual market ….”  There is an overlapping appropriation of $62B from 2019 through 2026 for “long term state stability and innovation allotments,” with no state match required until 2022.

Section 206 makes ACA § 1332 waivers (42 U.S.C. § 18052) more attractive to states.  Each application must state how the state’s proposed plan would “take the place of the requirements described in paragraph (2) that are waived … and provide for alternative means of, and requirements for, increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment ….”  This seems to grant CMS discretion to approve waivers of any paragraph (2) requirement.  That paragraph reads:

The requirements described in this paragraph with respect to health insurance coverage within the State for plan years beginning on or after January 1, 2014, are as follows:

(A) Part A of this subchapter.

(B) Part B of this subchapter.

(C) Section 18071 of this title.

(D) Sections 36B, 4980H, and 5000A of title 26.

Section 18071 describes the current ACA cost-sharing reduction program for individuals enrolled in ACA Exchange coverage.  Code § 36B describes the premium tax credit program for those enrollees.  Code § 4980H imposes the large employer mandate to offer affordable, minimum value, minimum essential coverage to at least 95% of full-time employees and their dependents.  Code § 5000A imposes the individual mandate to enroll in minimum essential coverage.  The Senate bill zeroes the individual and employer mandates and term limits the coverage subsidies.  There would seem to be no incentive to seek a waiver from those.

ACA § 1332 is found in Chapter 157, Subchapter III of Title 42.  Part A consists of sections 18021 through 18024.  Part B holds sections 18031 through 18033.  Here are the section headings.

  • 18021. Qualified health plan defined
  • 18022. Essential health benefits requirements
  • 18023. Special rules
  • 18024. Related definitions
  • 18031. Affordable choices of health benefit plans
  • 18032. Consumer choice
  • 18033. Financial integrity

Section 18021 describes the sort of plans that may be sold on ACA Exchanges. Section 18023 relates to funding of coverage for abortions.  Section 18024 defines large and small employers and group markets.  Sections 18031 – 33 relate to state exchanges.  The meat of this matter, apparently, is that CMS may permit states to define § 18022 “essential health benefits” so as to reduce the cost of insurance for those who prefer to buy relatively limited coverage.

Codgers like your correspondent are unlikely to buy that cheaper coverage but our young, healthy children and grandchildren may line up to buy it.  That could reduce the wealth transfer effect of the ACA’s protection of those with pre-existing conditions, but only marginally and indirectly.

That seems to be about it.  The Senate bill does not repeal ACA, ADA or HIPAA protections for those with pre-existing conditions.  It adds spending to help insurers bear the cost of our bad risks and allows states to expand cheaper insurance options for those who don’t want to swim in the same risk pools with us.

The “Discussion Draft” released June 22, 2017 by the Senate Budget Committee carries the House Bill number (H.R. 1628) of the American Health Care Act, and kills taxes like the House bill, but there are major differences, too.  At 142 pages, the Discussion Draft is less than one-sixth the heft of the ACA but it’s a brutal read.  Here are a few of the highlights that can be explained simply in this format, as we prepare for a likely vote-a-rama sometime before July 4.

It’s been re-named the “Better Care Reconciliation Act of 2017.” There’s a message in that moniker.  No Senate Republican will consider this the best they can do.  The hope is that 50 will consider it better than the status quo and therefore good enough for government work.

The premium tax credit subsidies for individual policies purchased through an ACA Exchange survive, though trimmed a bit. The household income eligibility limit drops from 400% to 350% of the federal poverty level.  If excess subsidies are paid, the feds will be allowed to recover the full amount of the excess payments and can add a 25% (up from 20%) penalty for materially incorrect credit applications. Also, the credits will be based on the premium for a “median cost benchmark plan” rather than the second lowest cost silver plan, and the new benchmark plan can have an actuarial value as low as 58%.  Similarly, it may become harder to qualify for the premium subsidy based on the high premium or low value of an employer coverage offer based on how Code § 36B affordability and value are redefined.

BCRA expressly funds ACA § 1402 cost-sharing reductions through 2019 but repeals the program at the end of that year.

Community rating survives but states may elect an age ratio as high as 5 to 1 beginning in 2020. Also starting in 2020, states may take control of medical loss ratio and rebate rules.

The small employer tax credits under Code § 45R disappear after 2019.

The individual and employer mandate taxes stay on the books but the rates and amounts are set at ZERO after 2015. This permits the IRS to assess and collect 2015 taxes.

These taxes are eliminated, with these conditions:

  • The Cadillac plan tax of Code § 4980I disappears from 2019 through 2025 but reappears in 2026;
  • The $2,500 annual FSA contribution limit ends this year;
  • The ACA § 9008 prescription drug tax also expires this year, along with the medical device tax in Code § 4191, the tanning tax of Code Chapter 49 and the health insurance tax of ACA § 9010;
  • The net investment tax is repealed retroactive to January 1, 2017;
  • The Medicare tax of Code § 3101 is cut back beginning in 2023.

HSA contribution limits will match out-of-pocket plan maximums and both spouses will be allowed to make HSA catch-up contributions.

Beginning one year after enactment, BCRA also creates a new legal entity – the fully-insured, single sponsor, multi-employer/member “Small Business Health Plan,” regulation of which is primarily federal, with broad ERISA pre-emption of state regulation. A federally-registered SBHP may issue coverage across state lines with just limited exposure to regulation by its “home” state.  However, the approved plan must forbid participating employers to fund individual market coverage for otherwise eligible employees based on the health status of those employees.

You have just read a very high-level summary of about 40% of the text of this Discussion Draft. The remaining 60% proposes significant changes to Medicaid, DSH payments and state health care program funding and administration.  Those are so complex that we’ll await an actual bill to review.

Lots of wrecks happen because drivers, staring at what’s directly in front of them, are unaware of dangers coming from other directions. This is an ACA blog, so right now we’re staring at the ACA changes being proposed by the Senate majority, but we want you to remain aware that collateral developments could spell trouble for your group health plan.  Here are two.

On June 16, 2017, the three ACA enforcement agencies (DOL, HHS, IRS) issed new FAQ guidance about non-quantitative treatment limintations (NQTL) and assoiciated disclosure obligations, including a draft form to be used to request such disclosures from employer-sponsored group health plans.

Four federal statutes work together to forbid such plans to impose financial requirements and treatment limitations for mental health and substance use disorder (MH/SUD) benefits exceeding the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits, and to force such plans to make related disclosures so that plan participants, and their authorized representatives, can assess compliance. NQTL examples include “medical necessity criteria, fail-first policies, formulary design, or the plan’s method for determining usual, customary, or reasonable charges.”  Often, out-of-network providers make related disclosure requests as their patients’ authorized representatives.

This new guidance also clarifies that “if a group health plan or a health insurance issuer provides coverage for eating disorder benefits,” those are “mental health benefits” fully subject to parity and disclosure standards.

“Boom!” While you were focused on mental health parity rules, the U.S. District Court for the Eastern District of Texas applied the Americans with Disabilities Act (ADA) to an exclusion of coverage for Applied Behavior Analysis Treatment for autism spectrum disorder. See Whitley v. Dr Pepper Snapple Group, Inc., E.D. Texas No. 4:16-cv-00362, Memorandum Opinion and Order (Doc. 4) entered May 4, 2017.  The claimant, mother of a child needing that treatment, claimed that the employer amended its plan to exclude that treatment after and because she sought coverage.  Denying the employer’s summary judgment motion, the Court wrote:

Plaintiff alleges Dr. Pepper changed the 2016 Summary Plan Description in response to and in retaliation for her inquiries regarding whether the Plan covered ABA Treatment. Dr. Pepper responds that the 2016 Summary Plan Description “clarification” did not single out Plaintiff or her son because it applied to all participants. However, Plaintiff alleges that Dr. Pepper modified the 2016 Summary Plan Description to single out and exclude coverage for a particular disability after becoming aware that Plaintiff’s son suffered from that disability. Plaintiff has sufficiently established that the modification and denial of fringe health insurance benefits were an adverse employment action. Plaintiff has made a prima facie showing of discrimination.

The employer contended that ABA Treatment had never been covered and that the 2016 amendment just clarified that lack of coverage. Viewed in the light most favorable to the claimant, said the Court, the evidence supported her claim that the plan was changed to drop coverage after and because she sought coverage, in violation of the ADA.

So, we’ll stare along with you at the ACA changes made in the Senate bill to be released today, but keep your head on a swivel because there are dangers in every direction.

Maxwell Smart, aka “Agent 86” in the 1960’s TV series Get Smart, claimed to have survived “fiendish” water torture – 300 gallons at the rate of one drop a minute.  When disbelieved, he asked, “Would you believe a quart?”  The IRS has a similar credibility problem.  It has warned ambiguously of impending employer mandate tax assessments for so long that many employers have ceased to take the Service seriously.

You have read here prior, sketchy, IRS guidance about when and how it will notify ALE Members of potential employer mandate tax assessments.  That guidance was updated April 20, thusly.

Click this link, then scroll down to Q. 55, where you will read this:

  1. How will an employer that filed Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, know that it owes an employer shared responsibility payment?

The IRS expects to adopt procedures that ensure ALEs receive certification that one or more full-time employees have received a premium tax credit. The determination of whether an employer may be liable for an employer shared responsibility payment and the amount of the potential payment will be based on information reported to the IRS on Forms 1094-C and 1095-C and information about full-time employees of the ALE that received the premium tax credit. The IRS will contact ALEs that filed Forms 1094-C and 1095-C by letter to inform them of their potential liability, if any. These letters will provide ALEs an opportunity to respond to the IRS before any liability is assessed or notice and demand for payment is made. (These letters are separate from the letters that the IRS may send to employers that appear to be ALEs but have not satisfied the requirement to file Forms 1094-C and 1095-C.)

The contact for a given calendar year will not occur until after both the due date, including extensions, for employees to file income tax returns for that year and the due date, including extensions plus a reasonable time for corrections based on errors identified by the IRS during processing, for ALEs to file Forms 1094-C and 1095-C.

If an employer is part of an aggregated ALE group, the process and rules described above and elsewhere in Making an Employer Shared Responsibility Payment apply separately for each ALE member in the aggregated ALE group.

  1. When does the IRS expect to begin notifying employers that filed Forms 1094-C and 1095-C of potential employer shared responsibility payments?

The IRS expects that the letters informing ALEs that filed Forms 1094-C and 1095-C of their potential liability for an employer shared responsibility payment for the 2015 calendar year (with reporting in 2016) will be issued in 2017.

The IRS expects it will begin issuing letters informing ALEs that filed Forms 1094-C and 1095-C of their potential liability for an employer shared responsibility payment, if any, in the latter part of each calendar year in which reporting was due (for example, in late 2018 for reporting in 2018 for coverage in 2017).

  1. Does the IRS expect to publish more information about the employer shared responsibility payment procedures?

Yes. The IRS expects to publish guidance of general applicability describing the employer shared responsibility payment procedures in the Internal Revenue Bulletin before sending any letters to ALEs regarding the 2015 calendar year. In addition, the IRS expects to supplement that guidance in several different ways, widely distributing the information to ensure that ALEs are properly informed of when and how the IRS will be contacting them.

Our educated guess is that ALE Members are unlikely to receive the referenced IRS letters for 2015 taxes before September 1, 2017.  Here’s why.

“In 2017” literally means at any time, up to and including the last day of the year. Since the IRS must assess such taxes within three years of their accrual, it could hardly wait any longer to assess employer mandate taxes that accrued in January 2015. So, this tells us that IRS may delay as long as possible.

The Internal Revenue Bulletin is published online, normally each Monday.  Through May 22, 2017, there has been no employer mandate tax assessment guidance.  Though the Bulletin expressly states that its guidance applies retroactively, FAQ 57 says that ALE Members will be given a significant lead time to prepare for receipt of these pre-assessment “contact” letters.  First, the Bulletin will announce the procedures, then the IRS will issue supplemental guidance through other channels – perhaps including more FAQ guidance updates.  “Contact” letters mailed as late as possible, in December 2017, would seem to break this promise.  So, we expect to see something in the Bulletin by July or August, then supplemental guidance in August or September, then the promised contact letters going in the mail in September or October 2017.

 

 

In the wee hours of May 5, 2017, a state governor awoke, startled.  Late on May 4, he or she had been briefed on the Patient and State Stability Fund and the Federal Invisible Risk Sharing Program described in § 132 of the American Health Care Act.    The reptilian brain was working, as always, in the background until it brought the body bolt upright in bed.  Our governor mumbled, “Billions would flow annually to states and insurers to fix the problems that Washington couldn’t fix.  The governor who succeeds will be the next President.”

Our hypothetical governor wasn’t dreaming.  If the AHCA becomes law, beginning in 2018, over $15B annually will be spent on this experiment.  Most of that money will fund state waiver programs that will be auto-approved, from 2018 through 2026, unless affirmatively rejected by CMS within 60 days of filing.  See AHCA § 132, adding to the Social Security Act new § 2203.

Of course, strings will be attached.  Applications for 2018 funding must be submitted within 45 days of AHCA enactment, in a form and manner yet to be prescribed by CMS.  Each application must certify, “that the State will make, from non-Federal Funds, expenditures for such purposes in an amount that is not less than the State percentage required for the year under section 2204(e)(1).” And, CMS will have to decide what to do if different state officials submit competing state plans, because the statute does not address that issue.  If no 2018 plan is received, or if the state plan is rejected, then CMS will coordinate a Default Federal Safeguard program with the state’s insurance commissioner.

This isn’t Medicaid expansion by another name.  The use of funds permitted by new § 2202 is broader, including assistance to high risk individuals, individual and small group market stabilization, facilitating access to preventive services, and payments directly to providers.  Plainly, the AHCA seeks to encourage local innovation.

Somewhere, perhaps soon, some governor will study this with staff, come up with something others consider crazy, and repeat these words famously spoken by Dr. Frederick Fonkensteen – “IT . . . COULD . . . WORK!”

____________

*See New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting)

 

And if you are an ACA “Applicable Large Employer” (ALE), it was.

The American Health Care Act, H.R. 1628, with last minute amendments noted in H. Rep. 115-109, passed the House of Representatives on Thursday afternoon, May 4.  Here is a very brief summary of the 131 pages of combined text, focused on changes for Applicable Large Employers.

The employer mandate tax isn’t repealed, but AHCA § 206 reduces the tax to $0 for 2016 and beyond.  This leaves the IRS free to assess and collect 2015 employer mandate taxes from Applicable Large Employers, so don’t ignore notices you may receive soon.  But if the employer mandate goes away, so do severe complications for collective bargaining and employee leasing arrangements.

AHCA § 207 suspends the Cadillac Plan tax until 2025, by which time we’ll all have Cadillacs, very probably.

Employer coverage reporting requirements and associated penalties are untouched by the AHCA.  If you like filing your Forms 1095-C, you can keep filing your Forms 1095-C … or even if you don’t.

While the ACA’s anti-retaliation provision (29 U.S.C. § 218c) survives, its danger should subside, practically speaking.  Employee subsidies to buy Exchange insurance present the biggest employer retaliation exposure, it seems to us, and AHCA § 203 ends those subsidies after 2019.  AHCA § 205 sets the individual mandate tax to $0 after 2015, which should reduce the pressure on low wage employees to seek Exchange coverage and related subsidies in 2018 and 2019.

Of course, none of this matters unless the Senate goes along.  There must be a parliamentary ruling that the AHCA may be considered under budget reconciliation rules, so that only 51 votes are needed.  Then, with whatever changes are made, it must find at least 50 votes, plus the Vice President.  Senate changes would require House approval thereafter.  We’re still in Act II.  It’s still messy, but it’s moving.

Most EEOC retaliation charges are dismissed if the supporting evidence is flimsy.  So why should employers expect ACA retaliation charges to be more costly?  Here’s why:  Gallas v. The Medical Center of Aurora, DOL Administrative Review Board No. 15-076 (Slip Op. April 28, 2017).

Long story short, Ms. Gallas, a registered nurse, was fired from her job as a psychiatric evaluator.  She attributed her discharge to her refusal to perform those functions using telemedicine tools provided by her employer.  In her view, psychiatric evaluation, other than face-to-face, provided substandard care, in violation of the Emergency Medical Treatment and Labor Act (EMTALA), the Health Insurance Portability and Accountability Act (HIPAA), state laws, and ethics rules.  Her employer carefully considered her contentions and rejected each one after investigation, but she persisted.  One day, Ms. Gallas refused to perform a remote evaluation.  Since no other evaluator was available, she was allowed to perform it face-to-face.  She was fired the next day.

The Administrative Law Judge assigned to her ACA claim dismissed it, since Ms. Gallas “failed to identify any specific provisions of the ACA which she reasonably believed the Respondent violated.”  That requirement seems to appear on the face of the statute, 29 U.S.C. § 218c(a), which reads, in relevant part:

No employer shall discharge or in any manner discriminate against any employee … because the employee … has—

(1) […];

(2) […];

(3) […];

(4) […]; or

(5) objected to, or refused to participate in, any activity, policy, practice, or assigned task that the employee (or other such person) reasonably believed to be in violation of any provision of this title (or amendment), or any order, rule, regulation, standard, or ban under this title  (or amendment).

(Emphasis ours.)  However, under the former Administration, DOL adopted rules and issued decisions that relaxed that standard markedly.  So, according to the Board, a claimant need not allege any ACA violation.  She “need only allege activity or disclosures ‘related’ to ACA’s subject matter.”  Though HIPAA and EMTALA are separate laws, they address some of the same health care problems as the ACA, so employee objections to perceived HIPAA or EMTALA violations will substitute, for this purpose, for the ACA’s requirement that the employee objected to what she reasonably believed to be an ACA violation.

Effectively, this standard blocks dismissal of such ACA retaliation claims unless the employer can show that the employee’s objection was not reasonably related to any reasonably perceived violation of any federal or state law relating to health care or health care financing. If the EEOC took the same view of the anti-retaliation statutes it administers, employers would be required to prove that employee complaints bore no reasonable relationship to any federal or state law or rule requiring fair employment practices.  Whether intended or not, a principal consequence of this approach is to enhance the settlement value of even the flimsiest retaliation claims.