Considering that billions of dollars could be at stake, businesses are seeking to keep the IRS from enforcement actions that would impose large penalties on employers who didn't provide health coverage to their employees beginning in 2015. And they may have some political allies.
According to a report from The Hill, House Ways and Means Committee Chairman Kevin Brady, R-TX, has said that he has discussed the idea of repeal or delay of the employer mandate with Health and Human Services Secretary Alex Azar, as well as other members of the Ways and Means Committee. The mandate, imposed by the Affordable Care Act, would penalize companies with more than 50 employees anywhere from hundreds of thousands to millions of dollars for failing to provide coverage to their employees.
The penalties took effect in 2015, five years after the ACA's passage, but the IRS did not begin enforcing them right away. Instead, in November of last year the agency announced that it would begin to assess those penalties, beginning with 2015. Brady is cited in the report saying that he hopes relief from the mandate would be retroactive, so that employers who failed to offer coverage back to 2015 would not be penalized.
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Meanwhile, the Wall Street Journal reports that businesses are protesting, saying that the law was too complex for speedy compliance—others point out that those businesses had five years to figure it out—or that the IRS lacks the authority to impose the penalty or that the repeal of the employee mandate to buy coverage should negate the employer mandate to provide it.
Still other arguments include the absence of notifications from ACA marketplaces, which are supposed to be received by employers before the IRS can assess a penalty, and a lack of understanding on the part of smaller companies that "really didn't understand how the rules applied and didn't offer coverage or sufficient coverage in 2015," according to Alden Bianchi, an attorney at the firm Mintz Levin, who is quoted in the report. Bianchi adds that some of those penalties add up to four or five million dollars, when "[t]o a smaller company, a half million is an existential threat."
In fact, the penalties are so substantial that if the IRS follows through, it could cost businesses dearly. According to a 2014 estimate from the Congressional Budget Office, companies would owe about $139 billion in penalties from fiscal 2016 to 2024.
Business groups are also trying to convince Congress to set aside the employer mandate now that the employee mandate has been repealed. And some lawmakers are discussing the possibility of letting employers off the hook for penalties accrued since 2015. But while Congress has more or less moved on to other actions (or inactions), and may not have the appetite to revisit the ACA for a while, not all members feel that way.
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