ACA Pay or Play –It’s Not a Small Part of the Law

In Part 1 of our ACA series, we wrote about the importance of NOT procrastinating about – or waiting to see what happens to – ACA’s Pay or Play mandate.

Since then, you may have heard about former White House Press Secretary Robert Gibbs’ prediction: “I don’t think the employer mandate will go into effect. It’s a small part of the law. I think it will be one of the first things to go.”

It’s certainly true that the ACA’s rollout since its’ 2010 passage has been marked by numerous clarifications, modifications and delays…and everyone’s heard about the technical difficulties experienced by those individuals trying to sign up on the federal “Exchange.” In fact, the Pay or Play rules — originally intended to start as of January 1, 2014 — has already been delayed twice and will not be fully implemented until 2016.

But it’s equally true that Pay or Play is not AT ALL “…a small part of the law.” Frankly, Mr. Gibbs should know better given his former position.

In fact, Pay or Play is a linchpin of the ACA on two critical levels:

• the expansion of adequate coverage to more Americans (see our Part 1 post for more details); and,
• the financing modeling that the ACA was built on. According to separate analyses by the RAND Corporation and the Congressional Budget Office, repealing Pay or Play would increase the federal deficit by $145 to $150 billion over the next 10 years.

The financial and policy implications of a Pay or Play repeal — not the least of which would be how to offset billions in lost revenue — are being debated on numerous fronts right now. Given the two-party dysfunction in Congress, the outcome will not be decided in the foreseeable future. Given the financial implications, it is very likely Pay or Play will survive pretty much intact.

So what’s next for large employers?

• don’t bet on repeal; that could be a very costly gamble
• if you haven’t already, act now to put the necessary tracking mechanisms/processes in place
• if needed, revise your open enrollment materials to include a form that each FT employee must sign each year, documenting that you offered minimum essential coverage

The ACA in general has significant implications for employers of all sizes, and Play or Play in particular has significant implications for large employers. Please visit us each week for further updates, ideas and recommendations.