Health Care Reform
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After unsuccessful efforts by Congress to repeal the Affordable Care Act during 2017, the focus has returned to making the controversial health care law more manageable for employers. Reforms NRF are pursuing include full repeal of the employer mandate that requires large companies to provide health coverage to full-time workers at government-dictated levels, restoration of the 40-hour workweek for benefit eligibility, repeal of ACA taxes including the Cadillac Tax and Health Insurance Tax, and changes to the byzantine ACA reporting rules.
Separately from ACA repeal, Trump signed an executive order in October 2017 that would allow small businesses to buy insurance for their workers through new federally sanctioned association health plans that would operate across state lines for the first time. AHPs allow small employers to band together through trade or professional associations to purchase coverage at more affordable rates normally available only to large companies. They are already allowed at the state level in some states, but cannot currently operate across state lines. NRF has strongly supported AHPs, saying expansion of the plans would help small businesses compete with larger companies in providing employees with health insurance at affordable rates. The Department of Labor released proposed AHP regulations this January, a move NRF said “brings us one step closer to making this commonsense reform a reality.”
Why It Matters to Retailers
While retailers have experienced the same added payroll costs as other industries, compliance is particularly complicated because of the nature of retail’s workforce. Retailers employ not just permanent, full-time workers, but also a large number of part-time, seasonal and temporary workers, and work hours can change rapidly according to demand. Certain provisions of the law, such as its 30-hour definition of full-time, are problematic under those conditions. As an industry with extremely tight profit margins, retailers are unable to absorb the added costs, and could be forced to lay off workers.
NRF Advocates for True Health Care Reform
Since its passage in 2010, the ACA has posed a number of challenges for employers and NRF has worked with Congress to minimize the burdens imposed by the measure. NRF’s priorities have included measures to streamline and simplify reporting requirements, end the Cadillac Tax and other tax provisions, and define “full-time” as 40 hours a week rather than 30.
With insurance premiums skyrocketing for years, NRF has a long history of seeking health insurance reform that would lower the cost of medical care and coverage. Instead, the ACA has emphasized mandates that drive up expenses for employers. Since the beginning of 2015, the law’s employer mandate has required that businesses with 100 or more workers provide insurance to full-time employees at coverage levels determined by the government, and the requirement has applied to businesses with 50 or more employees since the beginning of 2016. The costs of the mandates are so high some retailers have been forced to stay under the 50-employee threshold to avoid being covered; others have cut workers’ hours so they don’t count as full-time.
Repeal was President Trump’s to priority after taking office, and passed the House in 2017. But the effort stalled in the Senate, largely because conservative Republicans insisted on a more complete repeal than was possible under special procedures that were used in an attempt to avoid a Democratic filibuster. NRF called the approach “realistic legislation” that would have achieved “real reform” even if it did not achieve full repeal. Afterward, NRF said repeal remains the ultimate goal but that “there are many ways to reduce the burdens of this flawed law for the benefit of employers and workers alike.”
Over the years, NRF has found a number of ways to ease implementation of the law and help retailers with their compliance burden. NRF helped win repeal of a requirement that would have pushed companies with between 50 and 100 workers into the small-group health insurance market, which carries higher premiums than the large-group market and additional mandates. Also repealed was a requirement for large employers to automatically enroll workers in health care plans whether they wanted coverage or not. The effective date of the 40 percent Cadillac Tax on high-value health plans was delayed two years to 2020, the 2.3 percent medical device tax was suspended for two years until this year, and the law’s per-subscriber Health Insurance Tax on insurance companies was delayed from taking effect in 2016 to 2017 instead.
NRF Position: NRF opposes proposals to cap the income tax exclusion for employer-provided health benefits.
Background: Health benefits provided by employers are not taxed like wages. Instead, they are excluded from a worker’s total income. House Republicans have proposed capping the unlimited exclusion in an effort to reduce overall health care spending. NRF opposes capping the exclusion because it would undermine the source of coverage for 175 million Americans.
NRF Position: NRF supports the Commonsense Reporting Act (H.R. 3919/S. 1908), bipartisan legislation to streamline and simplify reporting requirements under the Affordable Care Act.
Background: The ACA requires reporting of information about employer-provided coverage in order to administer the individual and employer mandates. The current system looks backward (much like a tax return) and requires the matching of coverage and Social Security numbers for individual employees and dependents. In addition, employees face massive tax bills to refund health credits mistakenly obtained through ACA exchanges. The Commonsense Reporting Act shifts to a prospective system, simplifying reporting and helping prevent mistaken access to credits.
NRF Position: NRF supports bipartisan legislation to permanently repeal the ACA “Cadillac Tax” on high-value health benefit plans (H.R. 174/S. 58, the Middle Class Health Benefits Tax Repeal Act).
Background: The ACA sought to discourage excessively generous health plans by creating a surcharge on the excess value of health care, wellness and health savings account benefits over an indexed limit. The Cadillac Tax defines health benefits too broadly and indexes the value in such a way that mainstream plans will quickly be subject to the surcharge tax. The Cadillac Tax is currently in a two-year delay, but NRF supports its complete repeal.
NRF Position: NRF supports bipartisan legislation to repeal the ACA’s definition of “full time” for benefit eligibility as 30 hours per week (H.R. 3798, the Save American Workers Act; S. 1782, the Forty Hours is Full-Time Act).
Background: The ACA defines full-time work for health coverage eligibility as 30 hours per week, thus encouraging more use of part-time employees. Defining full-time as the standard 40-hour workweek would add to employee paychecks and encourage more full-time work.
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