[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
-----------------------------------------------------------------------
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/.
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
International Association of Fire Chiefs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Kenneth H. Ryesky, Esq.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
National Restaurant Association, NRA
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Retail Industry Leaders Association, RILA
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Union County College Chapter of United Adjunct Faculty of New Jersey
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]