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	<title> - TREASURY DEPARTMENT'S FINAL EMPLOYER MANDATE AND EMPLOYER REPORTING</title>
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	[House Hearing, 113 Congress]
	[From the U.S. Government Publishing Office]






	THE TREASURY DEPARTMENT'S FINAL EMPLOYER
	MANDATE AND EMPLOYER REPORTING
	REQUIREMENTS REGULATIONS

	=======================================================================

	HEARING

	before the

	SUBCOMMITTEE ON HEALTH

	of the

	COMMITTEE ON WAYS AND MEANS
	U.S. HOUSE OF REPRESENTATIVES

	ONE HUNDRED THIRTEENTH CONGRESS

	SECOND SESSION

	__________

	APRIL 8, 2014

	__________

	Serial No. 113-HL10

	__________

	Printed for the use of the Committee on Ways and Means




	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




	U.S. GOVERNMENT PUBLISHING OFFICE

	21-101 WASHINGTON : 2016
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	For sale by the Superintendent of Documents, U.S. Government Publishing
	Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
	DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
	Washington, DC 20402-0001









	COMMITTEE ON WAYS AND MEANS

	DAVE CAMP, Michigan, Chairman

	SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
	KEVIN BRADY, Texas CHARLES B. RANGEL, New York
	PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
	DEVIN NUNES, California JOHN LEWIS, Georgia
	PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
	DAVID G. REICHERT, Washington XAVIER BECERRA, California
	CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
	PETER J. ROSKAM, Illinois MIKE THOMPSON, California
	JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
	TOM PRICE, Georgia EARL BLUMENAUER, Oregon
	VERN BUCHANAN, Florida RON KIND, Wisconsin
	ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
	AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
	LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
	ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
	KENNY MARCHANT, Texas LINDA SANCHEZ, California
	DIANE BLACK, Tennessee
	TOM REED, New York
	TODD YOUNG, Indiana
	MIKE KELLY, Pennsylvania
	TIM GRIFFIN, Arkansas
	JIM RENACCI, Ohio

	Jennifer M. Safavian, Staff Director and General Counsel

	Janice Mays, Minority Chief Counsel

	______

	SUBCOMMITTEE ON HEALTH

	KEVIN BRADY, Texas, Chairman

	SAM JOHNSON, Texas JIM MCDERMOTT, Washington
	PAUL RYAN, Wisconsin MIKE THOMPSON, California
	DEVIN NUNES, California RON KIND, Wisconsin
	PETER J. ROSKAM, Illinois EARL BLUMENAUER, Oregon
	JIM GERLACH, Pennsylvania BILL PASCRELL, JR., New Jersey
	TOM PRICE, Georgia
	VERN BUCHANAN, Florida
	ADRIAN SMITH, Nebraska























	C O N T E N T S

	__________
	Page

	Advisory of April 8, 2014 announcing the hearing................. 2

	WITNESS

	Mr. Mark Iwry, Senior Advisor to the Secretary and Deputy
	Department Assistant Secretary for Retirement and Health
	Policy, U.S. Department of Treasury............................ 7

	SUBMISSIONS FOR THE RECORD

	Employers for Flexibility in Health Care Coalition, Letter....... 32
	International Association of Fire Chiefs, Letter................. 34
	Kenneth H. Ryesky, Statement..................................... 35
	National Restaurant Association, NRA, Statement.................. 39
	Retail Industry Leaders Association, RILA, Letter................ 48
	Union County College Chapter of United Adjunct Faculty of New
	Jersey, Letter................................................. 51


	TREASURY DEPARTMENT'S FINAL EMPLOYER
	MANDATE AND EMPLOYER REPORTING

	REQUIREMENTS REGULATIONS

	----------


	TUESDAY, APRIL 8, 2014

	U.S. House of Representatives,
	Committee on Ways and Means,
	Subcommittee on Health,
	Washington, DC.
	The subcommittee met, pursuant to call, at 2:00 p.m., in
	Room B-318, Rayburn House Office Building, the Honorable Kevin
	Brady [chairman of the subcommittee] presiding.
	[The advisory announcing the hearing follows:]

	ADVISORY

	FROM THE
	COMMITTEE
	ON WAYS
	AND
	MEANS

	SUBCOMMITTEE ON HEALTH

	CONTACT: (202) 225-3625
	FOR IMMEDIATE RELEASE
	April 1, 2014
	No. HL-10

	Chairman Brady Announces Hearing on the

	Treasury Department's Final Employer Mandate

	and Employer Reporting Requirements

	Regulations

	House Ways and Means Health Subcommittee Chairman Kevin Brady (R-
	TX) today announced that the Subcommittee on Health will hold a hearing
	on the implications of the recently released final regulations
	implementing the employer mandate and employer information reporting
	requirement provisions of the Affordable Care Act. This hearing will
	allow the Subcommittee to hear directly from the U.S. Department of the
	Treasury (Treasury) about how the Administration reached decisions to
	further delay the employer mandate, as well as explain the complicated
	reporting requirements. The Subcommittee will hear testimony from J.
	Mark Iwry, Senior Advisor to the Secretary and Deputy Assistant
	Secretary for Retirement and Health Policy. The hearing will take place
	on Tuesday, April 8, 2014, in B-318 Rayburn House Office Building,
	beginning at 2:00 p.m.

	In view of the limited time available to hear from the witness,
	oral testimony at this hearing will be from the invited witness only.
	However, any individual or organization not scheduled for an appearance
	may submit a written statement for consideration by the Committee and
	for inclusion in the printed record of the hearing.


	BACKGROUND:


	In July 2013, the Obama Administration announced a delay of the
	Affordable Care Act's (ACA) employer reporting requirements and the
	enforcement of the employer mandate for 2014. The Treasury Department
	cited concerns about the complexity of the requirements and the need
	for more time to implement the provisions of the law set to impact
	employers in 2014.

	On February 12, 2014, the U.S. Department of the Treasury
	(Treasury) and the Internal Revenue Service (IRS) published the final
	regulations implementing Section 4980H of the Internal Revenue Code
	(Code) as added by the ACA. On March 10, 2014, Treasury published final
	regulations implementing Code Section 6055 and 6056, as added by the
	ACA.

	Code Section 4980H imposes a requirement that employers with more
	than 50 full-time equivalent employees (FTEs) offer health coverage to
	their workers or pay one of two tax penalties. The statute specifies
	that the mandate ``shall apply to months beginning after December 31,
	2013.''

	Code Section 6055 requires employers and insurers ``who provide
	minimum essential coverage to an individual during a calendar year
	shall, at such time as the Secretary may prescribe, make a return in
	such form as the Secretary may prescribe'' that contains ``the name,
	address and taxpayer identification number (TIN) of the primary insured
	and the name and TIN of each other individual obtaining coverage under
	the policy.''

	Code Section 6056 requires applicable large employers to provide,
	``at such time as the Secretary may prescribe'' information related to
	the offer of coverage provided and the name and TIN for each employee
	offered minimum essential coverage.

	These three major regulations implement the bulk of the new
	mandates on employers required by the ACA. The statutory provisions
	themselves, as well as the regulatory process of implementing the
	requirements, have created significant controversy and concern. These
	final regulations contain further targeted delays and have been
	criticized by employers and employer groups for adding complexity and
	not addressing specific concerns raised by employers throughout the
	regulatory process that has extended over four years.

	In announcing the hearing, Chairman Brady stated, ``It is very
	clear now that the President's health care law, as it was written and
	even with the President's extensive modifications, is not working. The
	Administration continues to delay mandates for big business, but
	ignores the concerns of the hardworking Americans struggling to comply
	with the law's mandates and taxes. The delay for business has, however,
	only served to create additional complexity and concerns for business.
	The information reporting requirements are stunning in their breath and
	complexity. Employers do not understand these rules, and have serious
	concerns with how the Treasury Department will collect and use the data
	necessary to implement these onerous provisions.''


	FOCUS OF THE HEARING:


	The hearing will focus on the Obama Administration's delays and
	changes made to the statutory guidelines and deadlines concerning the
	employer mandate and reporting requirements.


	DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:


	Please Note: Any person(s) and/or organization(s) wishing to submit
	for the hearing record must follow the appropriate link on the hearing
	page of the Committee website and complete the informational forms.
	From the Committee homepage, http://waysandmeans.house.gov, select
	``Hearings.'' Select the hearing for which you would like to submit,
	and click on the link entitled, ``Click here to provide a submission
	for the record.'' Once you have followed the online instructions,
	submit all requested information. ATTACH your submission as a Word
	document, in compliance with the formatting requirements listed below,
	by the close of business on Friday, April 18, 2014. Finally, please
	note that due to the change in House mail policy, the U.S. Capitol
	Police will refuse sealed-package deliveries to all House Office
	Buildings. For questions, or if you encounter technical problems,
	please call (202) 225-1721 or (202) 225-3625.


	FORMATTING REQUIREMENTS:


	The Committee relies on electronic submissions for printing the
	official hearing record. As always, submissions will be included in the
	record according to the discretion of the Committee. The Committee will
	not alter the content of your submission, but we reserve the right to
	format it according to our guidelines. Any submission provided to the
	Committee by a witness, any supplementary materials submitted for the
	printed record, and any written comments in response to a request for
	written comments must conform to the guidelines listed below. Any
	submission or supplementary item not in compliance with these
	guidelines will not be printed, but will be maintained in the Committee
	files for review and use by the Committee.

	1. All submissions and supplementary materials must be provided in
	Word format and MUST NOT exceed a total of 10 pages, including
	attachments. Witnesses and submitters are advised that the Committee
	relies on electronic submissions for printing the official hearing
	record.

	2. Copies of whole documents submitted as exhibit material will not
	be accepted for printing. Instead, exhibit material should be
	referenced and quoted or paraphrased. All exhibit material not meeting
	these specifications will be maintained in the Committee files for
	review and use by the Committee.

	3. All submissions must include a list of all clients, persons and/
	or organizations on whose behalf the witness appears. A supplemental
	sheet must accompany each submission listing the name, company,
	address, telephone, and fax numbers of each witness.

	The Committee seeks to make its facilities accessible to persons
	with disabilities. If you are in need of special accommodations, please
	call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four
	business days notice is requested). Questions with regard to special
	accommodation needs in general (including availability of Committee
	materials in alternative formats) may be directed to the Committee as
	noted above.

	Note: All Committee advisories and news releases are available on
	the World Wide Web at http://www.waysandmeans.house.gov/.

	<F-dash>

	Chairman BRADY. This subcommittee will come to order.
	Today's hearing will examine two very important and complex
	regulations implementing the reporting requirements of the
	Affordable Care Act mandates on local businesses and workers.
	These regulations are long overdue. Businesses have been forced
	to wait 4 years since the passage of the law for the Treasury
	Department to finalize these rules. In the meantime, the
	regulatory process has set off controversy, political
	firestorms, and executive delays, and most importantly, this
	process is again raising the question of fairness.
	Why is big business receiving better treatment than
	individual Americans? Why is it fair to enforce some of the
	laws but not others? And why is it fair to force some to comply
	while others are getting passes and delays? Another significant
	question that needs asking, and we will be hoping you answer
	today, what does any of this have to do with true health care
	reform? For all the problems that did exist in our health care
	system prior to the Affordable Care Act, the voluntary employer
	based system was working. 160 million Americans received
	coverage from their employer, the largest source of health
	coverage in America.
	The worse part about these regulations, they do nothing to
	lower the cost of health care, the purported purpose of the
	Affordable Care Act. Instead, this law adds layers upon layers
	of new costs, burdens, and concerns about the privacy of
	government, forcing businesses to gather and report private
	information about workers' health care. I know workers aren't
	really comfortable with the IRS gathering and holding data on
	their personal health care insurance decisions and their
	family's for their lifetime. Why does the government need to
	know and track that? Survey after survey of companies and
	health benefit experts show employers believe the ACA will add
	to their cost, not lower them.
	Unfortunately, local businesses must now keep track of such
	new terms as look-back period, stability, aggregation rules,
	and minimum value. To ensure they follow these burdensome
	government requirements, they will worry if their health care
	plan meets the Federal Government's definition of
	affordability. They must now develop reporting systems, invest
	in a new information technology system, and worry about
	security of personal data about their workers and their
	workers' families they will be required to entrust to the
	scandal prone IRS, and they must grapple with the reality that
	the information they collect and transmit to the Federal
	Government will be the main proof the IRS uses to enforce the
	wildly unpopular mandate that workers must buy government
	approved health care or pay a tax against their own employees.
	Our witness today is Mark Iwry, a senior advisor to the
	Treasury secretary and acknowledged expert on employee benefits
	law. I appreciate you coming back to the committee to discuss
	these important issues. I am confident that Mr. Iwry will be
	able to answer any questions about the technical detail of both
	regulations.
	But Mr. Iwry, here is my practical concern. I believe you
	are the only person in America who is capable of understanding
	these regulations. I am confident you understand how they
	relate to specific employer/employee relationships and
	arrangements, but I seriously doubt many companies do.
	I know the business owners in my district with multiple
	franchises, low profit margins, and high worker turnover have
	little idea how all this is supposed to work. I know they most
	likely don't have the extra money lying around to invest in the
	IT required to comply with the information reporting
	requirements.
	These are complex issues, and that is why the White House
	delayed the mandate on companies, but a 1 year delay does not
	make any of this less complex, for the businesses in my
	district or anyone else's, so I ask, what does anything have to
	do--this have to do with true health care reform that lowers
	health care costs?
	Finally, the American people still have not been given an
	adequate answer about questions of fairness. We understand the
	mandate on businesses is costly. That is why you gave big
	business a break. Why is it fair to not give the same break to
	individual Americans and their families? Many families are
	frightened by the Affordable Care Act; the new plans they
	didn't want, the higher premiums, the doctors, and hospitals
	they can no longer see.
	They are not alone. Congressional Budget Office has stated
	that 8 million Americans are going to lose their health care
	insurance at work as a result of the Affordable Care Act. That
	isn't fair and it certainly isn't health care reform. These are
	the questions surrounding these controversial reporting
	regulations. We hope to gain more insight today.
	Before I recognize Ranking Member Dr. McDermott for the
	purpose of an opening statement, I ask unanimous consent that
	all members' written statements be included in the record.
	Without objection, so ordered.
	I now recognize Ranking Member Dr. McDermott for his
	opening statement.
	Mr. MCDERMOTT. Thank you, Mr. Chairman.
	Well, you heard a good deal of wringing of hands here and
	those gnashing teeth from the Republicans about this hearing
	today, about how the ACA is unworkable. Of course, this is all
	fantasy. It is another stunt cooked up by the Republicans to
	satisfy the extremist of the Koch brothers and the producers at
	Fox News. Let's start with some facts.
	Thanks to ACA, every American now has health security
	because they can no longer be locked out of the market or
	discriminated against because of a pre-existing condition. More
	than seven million people have signed up for health insurance
	through the Federal and state based marketplaces. More than 11
	million have been determined eligible for Medicaid between
	October and February this year, and three million adults are
	now covered by their parent's coverage. These are real people,
	real stories, real progress, not actors, paid by extremist PAC
	money to appear in fraudulent GOP attack ads. Sorry, the fight
	has been lost for the Republicans on ACA. The law is
	succeeding, and all the focus here about the ACA is not going
	to change that. These bogus hearings like today's proceedings
	only delay the inevitable.
	What you are hearing argued today is, the government
	shouldn't have given time to business to implement it. If we
	had gone ahead and done it, then the claim would have been we
	ran too fast, so it sort of like is the porridge too hot or is
	it too cold or is it just right. This day is coming when the
	Republicans will attempt to destroy the ACA by spinning and
	turning to fix it or be loving it to death, but today, the
	cries are about employer responsibility regulations, which were
	designed by the Treasury to help employers transition to the
	new ACA requirements. Certainly you ought to be able to
	acknowledge that truth, that the economy has improved since the
	ACA became the law.
	We got eight million new jobs since the ACA came, and you
	could say it is because of ACA. I won't but some could. Today's
	Republican cries certainly won't acknowledge that this week's
	Gallup Poll confirmed that the uninsured rate in America is the
	lowest since 2008. This reduction to an uninsured rate of 15
	percent is driven by the coverage enrollment under ObamaCare.
	Declines in the uninsured rate were largest among low
	income and black people in this country. Instead, Republicans
	will surely offer up again a series of mistruths and half
	truths and misinformation, so be clear, the CBO has definitely
	stated that there is no compelling evidence that part-time
	employment has increased as a result of ACA. We can also be
	clear that the ACA eliminates job lock, empowering Americans to
	change jobs, to become entrepreneurs, and to leave work to take
	care of a child or a sick loved one.
	But most importantly, Republican misinformation has nothing
	to do with the story of a constituent of mine named Ingrid. In
	2008, she had a terrible fall in her home. She was rushed to an
	emergency room where she was cared for and her life was saved.
	Yet Ingrid was stuck with a $23,000 hospital bill, which she
	didn't have. She couldn't afford health insurance. A few months
	later she was forced to sell her home to pay off the hospital
	bill. Today, she is happy, healthy, and covered because of ACA.
	She no longer has to choose between food on her table or life-
	sustaining medicine. She doesn't have to make that choice. Due
	to the health security act, she has both.
	So, before Republicans who have to plan to replace--whoever
	will plan to replace ACA, join the real world and inevitably
	drop this sad effort to kill a law that saves lives and saves
	money, they will stage a few more repeal votes, I am sure, on
	the floor. This won't be the last one, we will have hearings,
	because they will not give up the attempt to deny that it is
	the law of the land and it is working.
	They will likely expend a little more elbow energy trying
	to throw Ingrid off and the millions others back into the cold
	harsh winter of no health coverage, no peace of mind, and no
	protection. I can't wait for the day when we can get to work
	actually fixing the things in the law that need to be fixed,
	and that day will come as sure as I am sitting here.
	I yield back the balance of my time.
	Chairman BRADY. Today we will hear from Mr. Mark Iwry,
	senior advisor to the secretary and deputy department assistant
	secretary for Retirement and Health Policy, U.S. Department of
	Treasury. Mr. Iwry, you are recognized for 5 minutes.
	Mr. IWRY. Mr. Chairman, thank you.
	Ranking Member McDermott, Members of the Subcommittee, I
	appreciate the opportunity to testify on the recently issued
	final regulations regarding the employer shared responsibility
	provisions and the information reporting provisions of the
	Affordable Care Act.
	The employer responsibility provisions are contained in
	section 4980H of the Internal Revenue Code. Final regulations
	under section 4980H were published in February. Excuse me. The
	information reporting provisions for employers and insurers are
	in Section 6056 and 6055 of the code, and final regulations
	relating to information reporting were published last month and
	will be used to help administer the employer and the individual
	shared responsibility provisions and the premium tax credits.
	The final regulations provide employers with the guidance
	they need to comply with the employer responsibility provisions
	and provide flexible and practical means of doing so. Before
	developing the proposed regulations, Treasury issued 4
	successive notices describing potential approaches to
	implementing the employer responsibility provisions and invited
	public comment on each. The comments and comments on the
	proposed regulations from a wide range of stakeholders were
	considered carefully in developing the final rules.
	The rules contain various simplifications, including an
	optional look-back measurement period to make it easier and
	more practical for businesses to determine whether employees
	are full-time, if their hours vary between full-time and part-
	time, and if they are seasonal employees.
	This look-back measurement period was designed based on
	existing employer health care practices to be helpful and
	administrable. The rules also provide 3 optional alternative
	safe harbors that make it easy for employers to determine
	whether the coverage they offer is affordable to employees, and
	the final rules provide guidance, largely prompted by comments
	on the proposed regulations on whether employees of certain
	types or in certain occupations are considered full-time,
	including volunteers such as volunteer firefighters and first
	responders, seasonal employees, and adjunct faculty.
	While about 96 percent of U.S. employers are exempt from
	the employer shared responsibility provisions because they have
	fewer than 50 employees, for the 4 percent of employers to whom
	the provisions do apply, the rules provide a gradual phase-in
	which is described in my written statement.
	With respect to information reporting, many of the comments
	received before and after issuance of the proposed regulations
	urged that the final rules provide streamlined ways to comply,
	especially for employers offering highly affordable coverage to
	all or virtually all of their full-time employees, and many
	comments requested that the rules permit use of a single form
	for self-insuring employers that are reporting under both
	Section 6056 and 6055.
	Accordingly, the final regulations were issued with a view
	to simplifying and streamlining the proposed reporting rules to
	make them as practical and workable as possible, consistent
	with effective implementation of the law. That includes the
	need to provide individuals with the information that they need
	to complete their tax returns accurately for purposes of the
	individual shared responsibility provisions and potential
	eligibility for the premium tax credit, and providing the IRS
	with the information it needs for effective and efficient tax
	administration.
	Final rules contain several key simplifications. Employers
	that self-insure will have a streamlined way to report under
	the both employer and the insurer reporting provisions using a
	single consolidated form. In addition, employers that make a
	qualifying offer to any of their full-time employees are
	provided a simplified alternative to reporting monthly employee
	specific information on those individuals.
	Together with the other agencies in the executive branch,
	Treasury is implementing the Affordable Care Act to provide
	affordable, quality, health coverage for millions of American
	families.
	We welcome the opportunity to continue our work with the
	committee to achieve those objectives.
	Thank you, Mr. Chairman, and I look forward to answering
	the committee's questions.
	Chairman BRADY. Thanks, Mr. Iwry. I know you have worked
	very close with businesses to implement the mandate on
	companies and their reporting requirements. Treasury has
	received compliments from employers on the work on the mandate,
	not so much about the reportable requirements, and these
	employer groups you worked with most closely that are the most
	upset about these new reporting requirements. In other words,
	they aren't misinformed. They understand the rules.
	The retail industry leaders association call these
	regulations mind boggling for businesses of all sizes. National
	Restaurant Association described the regulations as
	overwhelming, it will create a morass of confusion for
	restaurant operators, typical small businesses in our
	communities.
	I assume you believe you did the very best you could, so is
	there a problem with the Affordable Care Act that needs to be
	changed to make this workable or did Treasury get the
	regulations wrong?
	Mr. IWRY. Mr. Chairman, first of all, I would suggest that
	the employer reporting regulations are not excessively complex.
	The final regulations do provide simplified reporting methods
	that we expect many employers, especially when they have time
	to study and digest the rules, will be able to use. For
	example, an employer making a qualifying offer to full-time
	employees would be able to report in a very summary fashion.
	Employers that are self-insuring will be able to use a single
	consolidated form for the 6056 and the 6055 reporting, and for
	employers that don't qualify for the simple simplified
	reporting methods, we don't think that in fact the reporting
	rules are asking for more than is reasonably necessary to
	administer the statute.
	At the employer level, name and address and employer I.D.
	number, contact person, basic information necessary to check
	compliance. At the employee level, generally, the individual's
	offer of coverage, whether they received an offer of affordable
	minimum value coverage from the employer, whether they took the
	offer, whether they enrolled in it, and if the individual is
	going to apply for a premium tax credit, we need to know
	whether the employer did make them an offer that would preclude
	them from eligibility for the premium tax credit.
	And Mr. Chairman, since these credits are available on a
	monthly basis, the information reporting is monthly, but we
	made the greatest effort we could to simplify and to try to
	streamline talking to a lot of employers, employer
	organizations, in the process. Where it is possible not to use
	month-by-month reporting, we provided an option to just have
	one code for the whole year if the information is sufficiently
	uniform across the year. If it is possible to avoid detailed
	information such as what was the dollar amount of the offer to
	the employee, which the statute asks for because the employee
	would not be entitled to a premium tax credit if they had an
	offer from the employer that was affordable, that was not more
	than 9.5 percent of their household income.
	We have looked for ways to help employers avoid having to
	do any work that could be avoidable, to incur any cost that
	might be avoidable or might be reduced. If an employer makes an
	offer that is sufficiently affordable to the individual, they
	wouldn't have to indicate what the dollar amount the individual
	would have had to pay is, as long as it is below an amount that
	would preclude the individual from being eligible for a tax
	credit, in any event.
	We are just trying to look to the bottom line, Mr.
	Chairman, in order to streamline things as much as possible for
	the business, and that includes, of course, small as well as
	larger businesses.
	Chairman BRADY. Mr. Iwry, I don't question your intention
	or the hard work you did to put these together. That is not at
	issue here, but I have read the simplified approach, and coming
	at it from a chamber of commerce background working with local
	businesses having filed these myself, even the simplified form
	approach, extremely complex, and I think burdensome and so
	limiting. I predict very few businesses will be able to use
	that approach. I just tell you that from my viewpoint.
	So, a couple of quick points. You last testified before
	this committee on July 17th in the wake of the Treasury blog
	post ``Delaying the Mandate on Businesses.'' You explain the
	command of the Treasury believed it had the authority under IRC
	7858 to delay the employer mandate.
	We asked several times in a straightforward question if
	that gives you the authority to delay the employer mandate,
	does it also give you the authority to delay the individual
	mandate, if that was the policy the White House chose to
	pursue. At the time you said we have not analyzed the question.
	I know we have had 9 months to look at this issue. So at this
	point, 9 months later, what was the result of your analysis? Do
	you have the authority to delay the mandate on individuals and
	families?
	Mr. IWRY. Mr. Chairman, thank you for that question.
	What we have done has been to take back the comments of the
	committee at that hearing, raising the question should the
	individual responsibility provision be the subject of
	transition relief as well? We had thought about that carefully
	before the hearing, of course, but because the committee was
	interested in that and raised the question again, we considered
	it further and concluded that there is not good reason to delay
	individual shared responsibility, and if I could share our
	thinking with you, Mr. Chairman, first of all----
	Chairman BRADY. Can I ask this because I think we recognize
	you decided not to provide that same fairness for individuals,
	and I know you have a list of reasons why, but the question is,
	do you have the authority to delay that mandate for
	individuals?
	Mr. IWRY. Mr. Chairman, if we don't believe that it is
	appropriate to be delaying that provision, if we believe that
	it is actually fair to individuals to keep that provision in
	place because it helps protect them from preexisting condition
	exclusions, from various aggressive practices that used to be
	possible in the insurance industry in the market, then we don't
	reach the question whether we have legal authority.
	There are a lot of things that we don't think we should do.
	We can't be, and wouldn't be considering whether we have the
	same authority that we have with respect to the employer
	responsibility where there is good reason to have given
	stakeholders the additional time that they very much asked for.
	There is good reason there to consider whether we had authority
	to do what was necessary.
	In the case of the individual responsibility provision,
	individuals who can't afford to pay that, don't have to pay it.
	As you know, sir, there is a hardship exemption that HHS can
	provide for people who can't afford it. People who can't afford
	the coverage but want the coverage, they can get that through
	premium tax credits or Medicaid, so we did not see a reason
	to----
	Chairman BRADY. So the point being is that----
	Mr. IWRY [continuing]. Provide more phase in.
	Chairman BRADY [continuing]. You have chosen not to for the
	reasons outlined, but the question still is do you have the
	authority to. You didn't have the authority to extend tax
	credits to those outside the exchanges, you did that. So you
	didn't have the authority to extend the deadline for signing
	up, but you did that.
	So a basic question again is, do you have the authority,
	whether you choose to use it or not, to extend the individual
	mandate?
	Mr. IWRY. Congressman----
	Chairman BRADY. In your view. Because I know 9 months ago
	you assured us you would analyze it and get us back that
	answer, so what is the answer to the question.
	Mr. IWRY. Congressman, we did analyze whether there was any
	reason to extend the time for the individual responsibility
	provision, beyond the statutory phase in or extension that is
	provided for 2014 and for 2015, such that the provision does
	not apply fully until 2016.
	So, on top of that statutory phase in, as you know, 1
	percent of pay this year; 2 percent, 2015; 2.5 percent, these
	are the maximums, by 2016. So the statute has phased that in.
	We don't see a reason to add administrative phase ins on
	top of the statutory phase in, and indeed, we do think, Mr.
	Chairman, sincerely that this individual shared responsibility
	provision makes possible the key insurance reforms which have
	had even bipartisan support in Congress.
	Chairman BRADY. Sure. So, do you have the authority, should
	you choose to, to extend the individual mandate, to delay it?
	Mr. IWRY. Mr. Chairman, that is a question that we don't
	reach because we do not believe that we have any cause to or
	that we should delay it, and therefore, we don't have the
	predicate for entering into the analysis of whether we would
	have legal authority.
	There are so many other things that we do not believe we
	should do. We certainly don't reach the question in those other
	areas, whether we have the legal authority to do something that
	we believe is unnecessary.
	Chairman BRADY. Have you done--since you chose not to, have
	you done the analysis? Maybe we will go back to when you told
	us you would go back and do the analysis, did you do that?
	Mr. IWRY. Mr. Chairman, again, what we did was to----
	Chairman BRADY. No, I recognize--the good news is you are
	talking to a committee that has been following your work very
	closely, but did you go back and do the analysis on the
	authority to extend it?
	Mr. IWRY. We don't think we have the authority to extend
	something that--a provision that--where there is no need. There
	is no need in terms of adminstrability. Individuals can fill
	out their tax forms to indicate very readily whether they have
	paid their--whether they have coverage, and if they don't,
	whether they are exempt, and if they are not exempt, to make
	the payment. The tax forms are easy for individuals to complete
	in that regard. Lord knows I am not suggesting our tax system
	as a whole is simple or easy to navigate, but this particular
	task for the individual is not a difficult task.
	Employers, by contrast, in complying with the employer
	responsibility rules, have more to deal with. They are
	providing the plans for all of their employees.
	Chairman BRADY. So, I just want and I want to give you
	plenty of time to answer, so you could do it in very clear way.
	So your answer is you do not have the authority to extend the
	individual mandate because you don't see the need to?
	Mr. IWRY. Well, Mr. Chairman, let me make clear. I am not
	one of the practicing lawyers at the Treasury Department. My
	role is not to do the legal analysis. I am not a policy person,
	but I am----
	Chairman BRADY. But the analysis--and I'm not--you did do
	the analysis as promised?
	Mr. IWRY. Mr. Chairman, I would like to go back, if I may,
	to the hearing record and to the transcript to make sure that I
	am understanding what we undertook.
	Obviously, we are happy to help you and to be cooperative
	in your important oversight work, so if I am misunderstanding
	what we agreed to do in July, then that is on me, Mr. Chairman.
	Chairman BRADY. But absent that--I mean, at the time they
	said we have not analyzed, we are going to do that.
	Simple question, did you do the analysis?
	Mr. IWRY. I did not do a legal analysis of the authority to
	extend a provision that we don't believe should be extended,
	and it would not be good for the American people to extend.
	Chairman BRADY. If you have done the analysis, you would be
	glad to forward that to us? If it has been done as of this
	date, you would be glad to share that with the committee?
	Mr. IWRY. Mr. Chairman, I will be happy to go back to my
	legal counsel colleagues at Treasury. We have an excellent
	legal team, very experienced, very knowledgeable and take this
	question back to them and see what they have to say and then
	get back to you.
	Chairman BRADY. Perfect. Thanks, Mr. Iwry.
	Mr. IWRY. Thank you, Mr. Chairman.
	Chairman BRADY. Dr. McDermott.
	Mr. MCDERMOTT. I am a little puzzled by the line of
	questioning. It sounds like the way you operate in Treasury, I
	am not a lawyer either, so I'm going to share that with you.
	You decide is there something we should do to make this thing
	work, and then you look to see if you have authority to do
	that. Is that a fair shortcut to the answer of what you do?
	Mr. IWRY. First, Dr. McDermott, if I may just clear
	something up of less importance. I am a lawyer but a recovering
	one, if I may say, and I am not part of the legal counsel team
	at Treasury. I am more involved in the policy, but if you could
	clarify your question for me.
	Mr. MCDERMOTT. The question is, Mr. Brady went at you about
	seven different ways like a good reporter or a good lawyer
	about whether or not you had done the analysis about whether
	you had the authority, but your answer was, over and over
	again, I didn't--we never got to that point because we didn't
	think it was something that needed to be done or even looked
	at. If it was something we thought need to be done, we would
	have then done the analysis can we do it. Is that fair?
	Mr. IWRY. Mr. McDermott, I am in general agreement with the
	way you are approaching this. You know, the authority to
	provide regulations in general, under the Tax Code, including
	to provide transition relief on those occasions where
	transition relief is worth considering, is contained in the
	statute, section 7805(a) of the Internal Revenue Code, and the
	statutory language reads as follows: It says that the Secretary
	of the Treasury, and I quote, ``shall prescribe all needful
	rules and regulations for the enforcement of the Tax Code,
	including all rules and regulations as may be necessary by
	reason of any alteration of law in relation to internal
	revenue.''
	In other words, rules that are necessary, including
	transition relief that may be called for, and the authority has
	been used to postpone the application, or to provide--of new
	legislation, to provide transition relief with respect to the
	effectiveness, timing of new legislation, on various occasions,
	across Administrations of both parties, for more than 2
	decades. I am not aware of any instance where the Treasury
	Department provided a transition relief in a case where they
	believed that it was not appropriate to provide transition
	relief.
	Mr. MCDERMOTT. I should hope not.
	Mr. IWRY. And the list of examples, which is not a complete
	list that we provided to the committee in our testimony last
	year in July and then again in letters to the committee,
	examples of past exercises of this well established authority
	under 7805(a) of the Tax Code, exercises the Treasury
	discretion, to give transition relief, that list of instances,
	and again, I am sure there are more than that. That wasn't
	intended to be illustrative, are all instances where the
	Treasury concluded that there was a legitimate need for more
	time, that stakeholders who were affected, taxpayers who were
	affected by the law would be able to implement it effectively
	if they had more time, and in some cases, the tax system as a
	whole would need more time in order to----
	Mr. MCDERMOTT. Let me interrupt you. My time is almost
	gone.
	I want to enter something in the record from the National
	Retail Foundation, which--or Federation, which represents 42
	million Americans, and their tax counsel says ``the
	Administration''--this is a quote, ``should receive a gold
	medal for recognizing the enormous complexities of the
	Affordable Care Act and its agility and flexibility in working
	with retailers and others in crafting these much needed common
	sense reforms and provisions. Continuing simplicity,
	streamlining, and clarification of the Affordable Care Act are
	in the best interest of the employers and the employees and the
	Administration and the Congress. The National Retail Federation
	will continue its constructive conversations with the Congress
	and the Administration itself, plus members, with compliance.''
	It sounds like at least one business organization, a fairly
	large one, thought you did a good job in working out what
	needed to be done, and I think that is really what is necessary
	for people to understand here. You are talking about 5 percent
	of employers are covered by this, since 95 percent have less
	than 50 employees, and 95 percent of those already give
	coverage to their employees, so we are talking about a very
	small number of people who apparently the chairman hears from.
	I don't hear from them, frankly.
	Chairman BRADY. Thank you, Doctor. Without objection, the
	letter will be introduced.
	[The information follows:]

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	Chairman BRADY. The votes are occurring. I would like to
	ask Chairman Johnson to ask his question, and then we will
	recess after votes and reconvene after votes continue.
	Mr. Johnson.
	Mr. JOHNSON. Mr. Iwry, as you know I am chairman of the
	Social Security subcommittee, and one of my long-standing
	priorities has been to protect American Social Security
	numbers. This new health law requires the IRS to collect
	massive new amounts of personal information, including Social
	Security numbers, when identifying theft and privacy are
	growing concerns of all Americans. How many Americans will have
	their Social Security numbers collected, stored, and reported?
	All of them that are involved in health care, right?
	Mr. IWRY. Mr. Chairman----
	Mr. JOHNSON. Let me ask you another one if you can't answer
	that. Who will collect the Social Security numbers? Is it
	employers, insurers, or both?
	Mr. IWRY. Mr. Johnson, regarding your first question, I
	believe that the Social Security numbers are now collected as
	part of the 1040 form that applies to--that is filed by tens of
	millions of American taxpayers. We are happy to get you the
	exact number. My recollection is that there are more that 100
	million tax filing units, and they provide taxpayer I.D.
	numbers, typically Social Security numbers, currently to the
	IRS.
	Mr. JOHNSON. Well, how are we going to protect them? You
	know we are losing them.
	Mr. IWRY. Sir, we share very much that concern. The
	importance of maintaining the security and privacy of the
	information is a high priority. The IRS has been very vigilant
	about that.
	Over its history, and we all, I think, recognize as you are
	suggesting, sir, that recent events in the private sector, for
	example, underscore the importance of the point you are making
	that privacy and security are key, but we don't think that we
	are taking risks with privacy and security in the case of these
	reporting provisions.
	Mr. JOHNSON. Well, but under this law, you are giving those
	numbers to your employer. Now we just give them to the IRS when
	we file our tax return. How are you going to protect those
	numbers?
	Mr. IWRY. Mr. Johnson, many employers do have the Social
	Security numbers. Typically employers have the Social Security
	numbers of their employees now. We recognize, though, that
	there is a legitimate balancing here and that, you know, we
	agree with your concern that privacy and security of the
	personal data be treated with the utmost care and seriousness.
	And these reporting provisions are intended to give effect to
	that concern, and one way that they do that, one way that they
	do that, sir, is that when taxpayer identification numbers are
	provided as part of the Affordable Care Act reporting, for the
	purpose of making sure that the tax system is in fact running
	the way it should and that people are not being charged with
	individual responsibility payments. When in fairness they
	shouldn't be because they did have coverage or that people
	get--in order to make sure people don't get premium tax credits
	that they are not entitled to under the law, the Social
	Security numbers or the other taxpayer identification numbers
	that are collected for the purpose of making sure that the tax
	administration is proper and appropriate, those are provided by
	the employer or the reporting entity--it could be an insurance
	company, to the IRS--and a statement is provided to the
	individual, to the employee as well.
	But that statement, which is the document that might
	otherwise present more of an issue here because it is not going
	through that existing safe channel from employers to the IRS,
	that statement will have a truncated, a truncated taxpayer I.D.
	number.
	In other words, those are the numbers that many of us now
	see on our documents that have some of the digits of the Social
	Security number and then the rest Xed out for security so that
	if that statement falls into the wrong hands, the Social
	Security number is still secure.
	Mr. JOHNSON. Well, that is not very convincing. I think it
	is going to be tough to assure every American that their most
	private information is safe from criminals because they are
	attacking us every day.
	Thank you, Mr. Chairman.
	Chairman BRADY. Thank you, Mr. Chairman.
	We are short on vote time. We will recess after the votes.
	[Recess.]
	Chairman BRADY. Let's reconvene the hearing.
	Thanks for being patient, Mr. Iwry, appreciate it very
	much, and the audience as well.
	So, the chair recognizes Mr. Pascrell.
	Mr. PASCRELL. Thank you, Mr. Chairman.
	Good morning, good afternoon, and good evening. Open
	enrollment began October the 1st. More than 7 million Americans
	have enrolled in private coverage and 3 million have enrolled
	in Medicaid or the Children's Health Insurance Program.
	Yesterday, Gallop announced for the fourth straight time that
	the rate of uninsured Americans has declined and is now at the
	lowest level recorded since 2008.
	Before the ACA, many people were paying for plans that
	didn't provide them with the coverage they need, the plans they
	purchased at high out-of-cost, pocket costs and artificially
	low caps on coverage. Americans were denied coverage for
	preexisting conditions, and insurance companies arbitrarily
	increased their premiums to the point where they couldn't
	afford insurance. My colleagues on the other side refuse to
	acknowledge any benefits that have resulted from this law.
	Let me interject this. Back 9 years ago when we passed that
	Part D in an excruciating vote 3 o'clock, 4 o'clock in the
	morning. I don't know if you remember that. But at that time,
	if you remember what happened after it, Democrats mostly voted
	against it. Republicans voted it, and the reason why we passed
	it were your votes. Most of us had campaigned against it before
	the vote. And what did we do? We went back into our districts.
	I remember the first three towns I went to, Clifton, Wayne,
	and Nutley, in my district at that time, and talked and said,
	look, I was against it, but this is going to be a good benefit
	down the road, it has got some kinks, it has got some problems,
	but we will work those things out over the years. And my
	brother Tom Price said at the time, at the beginning of Part D
	rollout, most American people heard only about what was wrong
	with the program. Doesn't that sound familiar?
	My good friend Sam Johnson I worked very closely with this
	year, said to CMS officials, you guys have done a super job.
	So, despite what had happened, automatic enrollment of dual
	eligibles took us into 2, 3, 4, 5 months after the passage.
	There were serious, serious problems.
	Low income beneficiaries were not receiving the payment
	assistance that they were eligible. There was big confusion
	about those roles. States had to step in to pay for seniors'
	drugs. In fact, in New Jersey, they had to come up with $20.6
	million because the rollout was not working.
	Enrollment wasn't nearly what it needed to be, what they
	expected it to be. By February, late February of 2006, only 5.3
	million seniors had signed up, where nearly 20 million seniors
	were without drug coverage.
	Now, let me say this, Mr. Chairman, this hearing is simply
	another attempt by your colleagues to spread misinformation,
	chip away at the ACA, to distract from the fact that this law
	has already helped millions of Americans get quality
	affordable--you know, admit that some things are right. We have
	admitted that some things are wrong. Can't you bring yourselves
	to that so that to work together, think how many more people
	would be enrolled?
	If the governors would have not been complicit, been
	cooperative, think how many more people would have been
	enrolled? If the governors who chose not to accept Medicaid
	money into their coffers of their own state to help the poor,
	think how many more people would have been enrolled in Medicare
	over the 3-and-a-half million that are enrolled since this
	program went into effect?
	Most disappointed to see delays related to the Affordable
	Care Act. I appreciate Treasury's desire to make sure the
	employer responsibility provisions are well crafted and
	incorporate the feedback of the business community in other
	stakeholders before moving forward with implementation. From my
	perspective, the final rule published by Treasury in February,
	addresses a number of concerns that I have heard from the
	business community.
	Mr. Iwry, can you please discuss Treasury's process for
	soliciting feedback from the business community and other
	stakeholders, and Number two, can you tell the committee what
	some of that feedback was and how Treasury addressed the
	stakeholders' concerns? That is the bottom line.
	Chairman BRADY. Mr. Iwry, we have about 5 seconds left in
	the time allotted, so perhaps you could do it by a letter to
	Mr. Pascrell and the committee, would be helpful.
	Mr. IWRY. Happy to do that, Mr. Chairman.
	Chairman BRADY. Your time expired. Mr. Gerlach.
	Mr. GERLACH. Thank you, Mr. Chairman.
	I want to refer back to our colleague Mr. McDermott's
	opening statement, when he said that it is fantasy, pure
	fantasy that the Republicans contend that the ACA is
	unworkable. If that is the case, why did you do these delays?
	Mr. IWRY. Mr. Gerlach, we do not believe that the ACA, the
	Affordable Care Act is unworkable. The reason we did provide
	transition relief in accordance with Treasury's authority to do
	so under the Tax Code, with respect to the employer shared
	responsibility provisions is that stakeholders made the case to
	us. Businesses----
	Mr. GERLACH. That it was unworkable to them?
	Mr. IWRY. Made the case to us, sir, that with more time----
	Mr. GERLACH. Why did they need more time?
	Mr. IWRY. With more time they would be able to better adapt
	their reporting systems, they----
	Mr. GERLACH. So under the time frame that the law allowed,
	they did not have the time to conform their systems to what was
	being required of them; that is why they requested more time?
	Mr. IWRY. Congressman, the business community started out
	in dialogue with us on what their top priorities would be----
	Mr. GERLACH. I am just asking why did they solicit and seek
	more time that these delays now allow them, why did they seek
	more time? And you apparently, as the department, assented to
	that----
	Mr. IWRY. Right.
	Mr. GERLACH. Assented to that and you gave them more time.
	Mr. IWRY. We did, sir. And the reason they sought more
	time, as it was explained to us on many occasions, was not
	generally that they thought they could not comply but that they
	thought it would be much more effective, it would be much less
	difficult if they have the time to study the rules, to digest
	them, to adapt their systems, whether it is for collecting
	information or expanding their plan to cover people.
	Mr. GERLACH. Did they ever explain to you that they would
	have to put more manpower into complying with the regulations?
	Did they explain to you it would cost more money for them for
	information technology changes? Did they talk to you about the
	increased cost that they would experience for legal charges and
	accounting changes? Did they explain all of those items that
	would make it very, very difficult for them to comply with the
	law the way it was written?
	Mr. IWRY. Congressman, starting as long as 3 years ago when
	we began an intensive dialogue with stakeholders, the business
	community as well as other stakeholders, the points were made
	that if the rules were not made simple and administrable
	enough, then they would impose costs that might otherwise be
	avoidable.
	Mr. GERLACH. Did you ever seek then to try to independently
	assess what the implication, what the increased cost would be
	on the employer community that is affected by this employer
	mandate? Did you go out and do an independent study that is
	something similar to the American Health Policy Institute study
	on large employers that this ACA, over 10 years, is going to
	increase their cost by 151 billion to 186 billion?
	Did you do any independent assessment as a department about
	what the increased burdening of this mandates would have on
	those employers of over 50?
	Mr. IWRY. Congressman, throughout the Treasury's notice and
	comment rulemaking process----
	Mr. GERLACH. Did you do a study, sir?
	Mr. IWRY. We assess, do our best----
	Mr. GERLACH. Sir, did you do a study, independently, to
	determine what the increased cost would be on those over 50
	employees to determine what they would experience under these
	mandates? It is a very simple question.
	Mr. IWRY. Congressman, we talked and listened to----
	Mr. GERLACH. I know you talked and listened. You said that
	over and over again. Did you do an independent study? Would you
	please answer the question?
	Mr. IWRY. Congressman, I would be happy to answer it.
	Mr. GERLACH. Please do.
	Mr. IWRY. I am not aware of----
	Mr. GERLACH. Thank you. You are not aware of any
	independent study. Is that your answer?
	Mr. IWRY. I am not aware of a Treasury Department study of
	the cost of----
	Mr. GERLACH. Thank you. Why do you think that was not done?
	Mr. IWRY [continuing]. The employer responsibility
	provision.
	Mr. GERLACH. Why do you think that was not done if there
	was no study done? Why? Why didn't you do that to independently
	determine what the impact of this law was going to have on
	those employers?
	Mr. IWRY. Congressman, we were getting a considerable
	amount, considerable amount of specific feedback from
	employers----
	Mr. GERLACH. So it was unnecessary?
	Mr. IWRY [continuing]. All through the process.
	Mr. GERLACH. So it was unnecessary?
	Chairman BRADY. Mr. Iwry, all time is expired. Perhaps you
	can answer that by----
	Mr. GERLACH. I will follow up with some additional
	questions, Mr. Iwry, if I may, and I would appreciate your very
	specific response to the questions.
	Mr. IWRY. I will be happy to respond.
	Mr. GERLACH. Thank you
	Chairman BRADY. Dr. Price.
	Mr. IWRY. Thank you.
	Mr. PRICE. Thank you, Mr. Chairman, and thank you, Mr.
	Iwry, appreciate you being here.
	Dr. McDermott opened his comments by saying that he felt
	this was a bogus hearing; do you think this is a bogus hearing?
	Mr. IWRY. Congressman, I think the committee has an
	important oversight role to play with respect to Treasury
	Department, and I very much respect and I know the Treasury
	Department and the IRS very much respects the committee's
	prerogatives and the committee's important role and function in
	oversight.
	Mr. PRICE. And when requests are made of members of the
	executive branch, it is incumbent upon the executive branch to
	comply with those requests, isn't it?
	Mr. IWRY. Congressman, certainly the executive branch, the
	Administration, and I can only speak for, of course, Treasury,
	in my case, but we view the requests of this committee with
	respect, of course, and we take the committee's requests
	seriously and view the committee's role as not only legitimate
	but important.
	Mr. PRICE. Thank you.
	You mentioned that this employer reporting requirement only
	hits 4 percent of employers out there. Is that an accurate
	statement?
	Mr. IWRY. Mr. Price, the employer responsibility
	requirements, including the employer reporting requirements,
	apply to employers that have at least 50 full-time employees or
	full-time equivalent employees.
	Mr. PRICE. About 4 percent. I have only got a little time.
	Mr. IWRY. And that that is about 4 percent of the total
	number of employers in the United States.
	Mr. PRICE. And how many employees is that?
	Mr. IWRY. It is a considerable number of employees, and I
	would do not know offhand, as I is it here, the exact number,
	but I have seen the data, sir, and we would be happy to----
	Mr. PRICE. That would be great.
	Mr. IWRY [continuing]. Get you the exact----
	Mr. PRICE. I think it is around----
	Mr. IWRY [continuing]. Number of the best data that we
	have.
	Mr. PRICE. I think it is around 90 million, I think,
	somewhere in that ballpark, but I would look forward to that
	response.
	I want to follow up on Mr. Gerlach's line of questioning.
	You mentioned, and I think this quote is accurate, that the
	request of the employers is, quote, ``to get the basic
	information to check compliance,'' unquote.
	Did you all--I know you didn't do a study, but did you all
	estimate what that costs an employer to comply with that
	requirement?
	Mr. IWRY. Congressman, you are asking whether we estimated
	what it would cost the employer to comply with which
	requirement?
	Mr. PRICE. With the employer required reporting
	requirements on their employees, and whether or not they have
	been provided a--been eligible for a subsidy or credit?
	Mr. IWRY. We have not, to my knowledge, that is, I am not
	aware of the Treasury, and there may be some other----
	Mr. PRICE. So it just wasn't----
	Mr. IWRY. Maybe in the executive branch that did this, but
	I am not aware that Treasury went beyond the very intensive
	dialogue and----
	Mr. PRICE. Would the fact----
	Mr. IWRY [continuing]. With the gathering from the business
	community.
	Mr. PRICE. But you just didn't think it was important
	enough to do that.
	Mr. IWRY. Congressman, we felt it was very important to----
	Mr. PRICE. To hear from them.
	Mr. IWRY [continuing]. Balance, to take the costs into
	account, and that is why we asked the business community----
	Mr. PRICE. So what are the costs? I mean, you are going to
	take the costs into account, you have to know what the costs
	are, right?
	Mr. IWRY. Certainly, and Congressman, depending on the
	specific provision, depending on how particular rules are
	simplified or the degree to which they are simplified, the cost
	is going to vary. The businesses themselves didn't have
	generally----
	Mr. PRICE. I understand. I have got just a little time, and
	I want to get to another question.
	Mr. IWRY. Yes, sir.
	Mr. PRICE. This starts this year. There will be credits and
	subsidies that will be provided to employees based upon this
	information. There will be some errors made just because of the
	nature of the beast. When an error is made and an employee gets
	a subsidy or a credit that they are not eligible for in
	hindsight, is the IRS going to go back and get that money back
	from that taxpayer?
	Mr. IWRY. Congressman, let me address that this way. The
	Affordable Care Act provides that if an individual obtains a
	premium tax credit based on information that turns out to be
	either not correct or not current and based on the current
	final information such as the income of that household for the
	year in which the coverage, and therefore, the premium tax
	credit was provided, the law provides for a reconciliation
	process in connection with the individual filing their tax
	return with the IRS. So----
	Mr. PRICE. That means getting that money back from that
	taxpayer.
	Mr. IWRY. There could be either an additional tax credit
	that the person is entitled to. If they claimed less than they
	were entitled to, for example, it might turn out that their
	income was actually lower than what was anticipated.
	Chairman BRADY. Mr. Iwry, I apologize----
	Mr. PRICE. My time is expired.
	I look forward to providing some questions in written form
	and look forward to a proper response.
	Chairman BRADY. Thank you very much. Mr. Smith is
	recognized.
	Mr. SMITH. Thank you, Mr. Chairman, and thank you, too, Mr.
	Iwry, for your time here today.
	Many Nebraskans have expressed their concern to me that
	many of the changes made to this health care law have been made
	without congressional approval, and I was wondering, is the
	Administration working on legislation that they would--to
	propose before Congress to codify any of these changes that
	have already been made?
	Mr. IWRY. Congressman, are you referring to the transition
	relief with respect to the employer shared responsibility
	provisions?
	Mr. SMITH. Really any of the--can you agree that there have
	been many changes made or delays in time frames and so forth
	that have been issued? Is the Administration working on
	anything to propose that in the form of legislation?
	Mr. IWRY. Congressman, the Treasury Department, and I can
	speak for only with respect to Treasury since that is where I
	work, the Treasury Department has exercised its authority to
	provide various safe harbors for businesses and other
	stakeholders, transition relief for stakeholders of various
	kinds pursuant to its well established and long held authority.
	Under section 7805(a) of the Internal Revenue Code, we have
	authority to interpret the Tax Code and particularly, sir, when
	there is a new law, what the statute refers to as an alteration
	of the law relating to internal revenue, authority with respect
	to a new law to issue rules and regulations to give effect to
	it, and when we get the kind of credible comments from
	stakeholders that we received regarding the need for more
	transition relief in some cases or as much simplification and
	streamlining as possible, which we have tried our best to do in
	the case of the reporting as well as the employer
	responsibility regulation.
	Mr. SMITH. There are many folks who are concerned that the
	executive authority is not being used appropriately, and would
	the Administration be open to, from your perspective, be open
	to proposing legislation that would codify any of these
	changes?
	Mr. IWRY. Congressman, the kind of practical common sense
	interpretations, of the tax statutes at issue that Treasury has
	provided in connection with employer responsibility,
	regulations, and the reporting regulations, are consistent with
	Treasury's existing statutory authority. That statute exists in
	the form of Section 7805A of the Internal Revenue Code as it
	has been in effect, not only recently, but for years and for
	more than two decades, sir.
	Mr. SMITH. So, no legislation would be necessary, is what
	you are saying?
	Mr. IWRY. No legislation would be necessary, beyond since
	we have the legislative authority in 7805A to issue the rules
	and regulations that we have issued with respect to employer
	responsibility and employer an insurer reporting. That
	legislation is already on the books, and we have exercised it
	in much the same way that Treasury Department under previous
	Administrations, both Republican and Democrat, have exercised
	that existing statutory authority.
	Mr. SMITH. Okay. Following up on Mr. Johnson's questions
	relating to the information associated with the Social Security
	numbers and other information, has the IRS tested if they have
	the ability to process and protect the gathering of the
	information that certainly I would think would be shared at a
	much greater velocity as there are more questions being asked
	on the tax returns relating to health care?
	Mr. IWRY. Congressman, this is not a matter of personal
	health information being shared with the IRS. We are talking
	about----
	Mr. SMITH. But has the IRS tested the security of that
	information to your knowledge?
	Mr. IWRY. I believe--to my knowledge, sir, and I am at
	Treasury, I don't work in the IRS per se, but my understanding
	is that the IRS constantly checks its systems to make sure that
	the kind of security of information and privacy that the
	committee is expressing concern about and that the
	administration is likewise extremely concerned be kept,
	maintained in as tight a way as possible, as protective a way
	as possible for the American taxpayer and the American people
	in general, that the IRS continually makes sure that its
	systems are secure and do protect individual taxpayer
	information from breaches of security or breaches of privacy.
	And, indeed, the current system where employers obtain
	Social Security numbers from individuals and where Social
	Security numbers are placed on the tens of millions of 1040
	returns that are filed every year, the Social Security numbers
	on millions of 1099 reports, numbers collected by financial
	institutions and submitted to the IRS on those reports, that is
	all part of that system, and I know the IRS takes the utmost
	care with that.
	Mr. SMITH. Thank you, Mr. Iwry.
	My time has expired.
	Chairman BRADY. Mr. Kind.
	Mr. KIND. Thank you, Mr. Chairman.
	Mr. Iwry, thank you for coming to provide a little bit of
	clarification today.
	Take us back if you will as far as the Treasury's
	determination for the one year moratorium on the employer
	reporting requirements under Section 7805A, the transitional
	discretion authority, because it just seemed to me that when I
	heard the administration make the announcement for the one-year
	delay, it was based on the feedback that the administration was
	getting from the business community. In essence we are saying
	it is not that we don't want a report, it is just that we need
	more time to upgrade our systems and our software so that when
	we do report, we are going to be able to report as accurately
	as possible.
	And I think to the administration's credit, you heard that
	feedback from the business community and said all right, fine
	then we understand this could be difficult in the initial
	stages, so we will exercise 7805 discretion with this and give
	you a little bit more time to upgrade your system so that you
	can report accurately a little bit. Is that close to the
	finding or the determination that the administration used as
	far as the one year delay in reporting?
	Mr. IWRY. Mr. Kind, I agree with you. The factual
	predicates for the exercise of our well-established authority
	under the tax code to issue rules and regulations, including
	ones that would provide appropriate transition relief in
	connection with a change in law, that was very much a part of
	the factual predicate; and there were a whole variety of
	organizations from the plan sponsor community, including
	employer organizations with members that did not sponsor or
	have yet to sponsor health plans for their employees who asked
	for additional time.
	And as you say, many of them indicated we are prepared to
	comply with this. Many of them said frankly we think this is a
	good law, we think that this will help the American people.
	Obviously there is a diversity of opinion on that in the
	business community, but many of them did say in any event, we
	know this is the law of the land, and we are prepared to comply
	with it. Please just give us additional time. And, Mr. Kind,
	that is not unusual.
	When major legislation is enacted, I think one thing that
	probably everyone can agree on here, I would imagine, is that
	this legislation is major, this is big. When something is, when
	a significant reform is enacted, when major legislation is
	enacted, it is very common, very typical, for Treasury's notice
	and comment rulemaking process, to elicit very detailed,
	thoughtful, informative comments from the stakeholders, from
	the taxpayers, including the business community, that shed more
	light on how the statute needs to be applied, that shed light
	on the practical concerns or challenges that any major piece of
	legislation poses.
	Mr. KIND. Just so we are clear, this is clearly not the
	first administration that has invoked section 7805A authority
	for transitional relief. In fact, I have had an opportunity to
	review in the past the letter the Treasury did submit to
	Chairman Camp of this committee highlighting some of the
	specific instances in the past where previous administrations
	have invoked this authority as well; is that correct?
	Mr. IWRY. Mr. Kind, that is very true. We submitted a list
	of instances that illustrate that for more than the last 20
	years, the Treasury Department has exercised its authority
	under 7805A of the Tax Code, to provide transition relief of
	various kinds to a limited degree, limited in scope, limited in
	time, with respect to a variety of new tax-related legislation.
	And it has been very typical for the taxpayer community to
	say, no, you know, we have studied this law; and we now
	realize, particularly through the process of proposed
	regulations and comments, that everything is more complicated
	than it first appears. It is not just the Affordable Care Act.
	Mr. KIND. Mr. Chairman, I would ask unanimous consent that
	that letter be submitted for the record for purposes of this
	hearing.
	Chairman BRADY. Without objection.
	[The information follows:]

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	Mr. KIND. Mr. Iwry, it just seems like the administration
	is in a tough position given the political debate surrounding
	the Affordable Care Act. You're damned if you do, and you're
	damned if you don't. If you don't provide some transitional
	relief, you are going to get criticized for doing that, and if
	you do provide relief, you are criticized for not helping make
	the program collapse because things just aren't ripe yet or
	timely in compliance.
	So, I would encourage the administration to continue using
	the pragmatic discretion that you have working with the
	business community to try to make this work for all Americans.
	Thank you, Mr. Chairman.
	Chairman BRADY. Mr. Iwry, thanks for being here today. As
	you know, there are continued concerns about the cost in
	compliance for the regulations, so we are going to continue
	this dialogue going forward.
	And, secondly, please do check on the analysis that was
	done on the authority. I would like to have that forwarded to
	the committee. I will follow with a letter to you to that
	effect.
	So, again, thank you very much, and thanks for being
	patient during the votes.
	Mr. IWRY. Thank you very much, Mr. Chairman.
	Chairman BRADY. This subcommittee is adjourned.
	[Whereupon, at 3:55 p.m., the subcommittee was adjourned.]
	[Submissions for the Record follows:]
	Employers for Flexibility in Health Care Coalition


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	International Association of Fire Chiefs

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	Kenneth H. Ryesky, Esq.

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	National Restaurant Association, NRA

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	Retail Industry Leaders Association, RILA


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	Union County College Chapter of United Adjunct Faculty of New Jersey


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