Health-care-law provision on equal coverage delayed
IRS officials said they were wrestling with complicated questions such as how to measure the value of employee health benefits, how to define “highly compensated” and what, exactly, constitutes discrimination.
The New York Times
WASHINGTON — The Obama administration is delaying enforcement of another provision of the new health-care law, one that bars employers from providing better health benefits to top executives than to other employees.
Tax officials said they would not enforce the provision this year because they had yet to issue regulations for employers to follow.
The health-care law, adopted nearly four years ago, says employer-sponsored health plans must not discriminate “in favor of highly compensated individuals” with respect to either eligibility or benefits. The government provides a substantial tax break for employer-sponsored insurance, and, as a matter of equity and fairness, lawmakers said employers should not provide more generous coverage to a select group of high-paid employees.
But translating that goal into reality has proved difficult.
Officials at the Internal Revenue Service (IRS) said they were wrestling with complicated questions such as how to measure the value of employee health benefits, how to define “highly compensated” and what, exactly, constitutes discrimination.
Bruce Friedland, an IRS spokesman, said employers would not have to comply until the agency issued regulations or other guidance.
President Obama signed the health-care law in March 2010. The ban on discriminatory health benefits was supposed to take effect six months later. Administration officials said then that they needed more time to develop rules and that the rules would be issued well before this month, when other major provisions of the law took effect.
A similar ban on discrimination, adopted more than 30 years ago, already applies to employers that serve as their own insurers. The new law extends that policy to employers that buy insurance from commercial carriers such as Aetna, Cigna, Humana and WellPoint or from local Blue Cross and Blue Shield plans.
This could eventually be a boon to workers, the administration says.
“Under the Affordable Care Act, for the first time, all group health plans will be prohibited from offering coverage only to their highest-paid employees,” said Erin Donar, a Treasury spokeswoman. “The Departments of Health and Human Services, Labor and the Treasury are working on rules that will implement this requirement.”
The enforcement delay is another in a series of deadline extensions, transition rules, policy shifts and other steps by the Obama administration to minimize disruption from the new law, which is sure to be invoked by Democrats and Republicans running for office this fall.
In recent months, the administration has delayed a requirement that larger employers offer coverage to full-time employees and delayed online enrollment in the federal insurance exchange for small businesses. It waived major provisions of the 2010 health law so consumers could renew policies that would otherwise have been canceled or terminated because they did not meet the law’s coverage requirements.
In addition, federal officials said that people with canceled insurance policies could obtain hardship exemptions sparing them from tax penalties if they went without insurance this year.
One of the questions facing the IRS is whether an employer violates the law if it offers the same health insurance to all employees but large numbers of low-paid workers turn down the offer and instead obtain coverage from other sources, such as a health-insurance exchange.