07.08.2013 2

Obama’s extralegal ‘waiver’ of the employer mandate

By Nathan Mehrens

On July 2, Assistant Treasury Secretary for Tax Policy Mark Mazur announced in a blog post that the employer mandate (26 U.S.C.4980H) starting in 2014 to provide minimum coverage under the new health care will not be enforced.

There is only one problem. There is no waiver provided in this particular section for the “assessable payment” also defined as a “penalty” for failure to comply with the mandate.

That is significant because there are waivers that were built into the law for the taxes imposed for failure to meet minimal coverage and other requirements for group health plans, long-term care insurance contracts, Archer MSAs, pension plans, employer contributions to health savings accounts, and the excise tax on Cadillac plans.

Therefore, since waivers were allowed for under the law on everything except for the employer mandate, which was defined as an “assessable payment,” Congress did not intend for there to be any exception or waiver to the employer mandate penalties.

Which is likely one reason why in the blog post Mazur never actually calls it a “waiver.”

Instead, the post states the Obama Administration “will provide an additional year before the [Affordable Care Act] mandatory employer … reporting requirements begin… [for] certain employers with respect to the health coverage offered to their full-time employees.”

By delaying the reporting requirements, the effect is to render the fines levied under the employer mandate unenforceable: “We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014.  Accordingly, we are extending this transition relief to the employer shared responsibility payments.  These payments will not apply for 2014.  Any employer shared responsibility payments will not apply until 2015.”

But 26 U.S.C. 6056, which provides for the employer reporting requirements, similarly does not include any waiver provision. It states reporting by employers is supposed to take place “during a calendar year… at such time as the Secretary may prescribe… [and]  is in such form as the Secretary may prescribe.”

Meaning at some point during the calendar year, the Secretary of the Treasury is required to give a deadline for the form to be submitted, and to provide the format for providing the information to the government. But that’s where the Administration’s discretion ends.

Therefore, the burden of compliance still falls, not on the government, but on the employer to provide the following information: “the name, date, and employer identification number of the employer; a certification as to whether the employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan; if the employer certifies that the employer did offer to its full-time employees (and their dependents) the opportunity to so enroll the length of any waiting period with respect to such coverage, the months during the calendar year for which coverage under the plan was available, the monthly premium for the lowest cost option in each of the enrollment categories under the plan, and the employer share of the total allowed costs of benefits provided under the plan; the number of full-time employees for each month during the calendar year; the name, address, and TIN of each full-time employee during the calendar year and the months (if any) during which such employee (and any dependents) were covered under any such health benefits plans, and such other information as the Secretary may require.”

Some reporting requirements under laws are onerous. This is not one of them. As far as reporting requirements go, employers could easily provide this information even if the Secretary never provided a form for them to submit, making Mazur’s justification for the delay completely fallacious.

He claims that delaying the reporting requirements is so the Administration may “consider ways to simplify the new reporting requirements consistent with the law” and “provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”

Adapting “reporting systems”? Like what? Opening a Post Office box for employers to mail their completed forms to? Giving Turbo Tax another year to create an electronic version of the form? Yeah right. The real rationale for the delay is completely political. How do we know?

The problem with the employer mandate is not the reporting requirements. It is adding employees working 30 hours or more to employer-provided health care rolls, and the rapidly rising costs of premiums. The White House simply wants to avoid the political fallout of the skyrocketing costs of health care under the law during the 2014 midterm elections.

But even if the Administration really needed another year to figure out the form — it doesn’t — the law does not allow for the delay.

More importantly, employers are still required to comply with the mandate to provide minimum coverage under the law, and to submit the reporting information to the Secretary. A blog post does not change that.

Perhaps that is why Mazur still “strongly encourage[s]” employers to “voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015” and to “maintain or expand health coverage” in 2014.

But news media reports that the employer mandate somehow does not apply in 2014 is not worth the bits and bytes it’s printed on. The Administration is breaking the law by not implementing the reporting requirements, and is further implicitly encouraging employers to violate the mandate — when in fact it is still in effect.

No president, not even this one, has the constitutional prerogative to just arbitrarily change the law of this country.  That is what separates a representative democracy from a third world dictatorship where the elected Congress is largely just meaningless apparatchiks. It cuts to the heart of his disrespect for the constraints on his presidential powers.

Therefore, it is time for Congress to take action to protect the Constitution. The entire law should be repealed.

But failing that, in the very least, enforcement of the law should be delayed not just for one, but for three years to ensure that bureaucratic bungling doesn’t collapse the health care system, and worse compel employers into non-compliance with the law as it is written.

As it stands, if Congress does not act, this “waiver” by the Administration could still lead to significant penalties being levied on employers in the form of back taxes owed because they assumed the employer mandate had actually been waived when it was not.

Nathan Mehrens is the President of Americans for Limited Government.

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