In the letter, ERIC responds to the government’s proposal of two methods for verifying whether employer-sponsored coverage is affordable to an employee and meets the minimum required value under the ACA (see Proposed Regulation on Exchange Eligibility Part I). The first method under consideration would be the use of a template that employers would complete and give to employees to provide the required information. The second method would be the use of a central database, with data populated by employers, that exchanges would consult to determine an individual’s eligibility to buy a subsidized plan on an exchange.
ERIC President Mark Ugoretz warned that, “Large employers are particularly concerned that a mechanism be found to avoid excessive requests from the exchanges for information and data with respect to employees who may be eligible to purchase coverage through an exchange.” Further, he noted, “it is important that the government make both methods available to employers and allow employers to choose which method to use.”
ERIC also recommends that the mechanism through which employers submit required information to the central database should be compatible with the reporting of much of the same information that will be required of employers under section 6056 of the Internal Revenue Code.ERIC also submitted a letter addressing a proposed safe harbor for determining the affordability of employer-sponsored coverage for purposes of the shared-responsibility provisions of the ACA.
In the letter on the affordability safe harbor, ERIC addresses the rule proposed by the government that, to assess whether the health coverage they offer to their employees is "affordable" for purposes of avoiding the employer penalty under the ACA, the employer may measure affordability on the basis of W-2 income rather than household income.
ERIC urges that sponsors also be permitted to use the safe harbor on a prospective basis by using a reasonable projection of an employee’s current wages to set the employee’s contributions for the following year at a level that would meet the affordability requirements.
ERIC argues that to give employers an opportunity to ascertain whether they are offering affordable coverage to their employees in order to avoid the shared responsibility penalty, as the Notice provides, the safe harbor should provide employers certainty regarding whether they will satisfy the safe harbor in advance of the calendar year.“Employers should be permitted to satisfy the safe harbor prospectively by using a reasonable projection of an employee’s current wages to set the employee’s contributions for the following year at a level that would meet the affordability requirements,” the letter contends.