    [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

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                          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:]

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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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                                     [all]