[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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