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21–101 2016

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 

( 


ralbany on LAP520R082 with HEARINGS
ii 

COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HEALTH 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

JIM MCDERMOTT, Washington 

MIKE THOMPSON, California 

RON KIND, Wisconsin 

EARL BLUMENAUER, Oregon 

BILL PASCRELL, JR., New Jersey 


ralbany on LAP520R082 with HEARINGS
iii 

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 


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(1) 

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:] 


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2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HEALTH 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

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.’’ 


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3 

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. 


ralbany on LAP520R082 with HEARINGS
4 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://www.waysandmeans.house.gov

f 

/. 

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 


ralbany on LAP520R082 with HEARINGS
5 

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 


ralbany on LAP520R082 with HEARINGS
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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. 


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7 

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 


ralbany on LAP520R082 with HEARINGS
8 

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 reportVerDate Sep 11 2014 02:52 Sep 03, 2016 Jkt 021101 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21101.XXX 21101

ralbany on LAP520R082 with HEARINGS
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ing 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? 


ralbany on LAP520R082 with HEARINGS
10 

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. 


ralbany on LAP520R082 with HEARINGS
11 

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. 


ralbany on LAP520R082 with HEARINGS
12 

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. 


ralbany on LAP520R082 with HEARINGS
13 

Mr. MCDERMOTT. I should hope not. 

Mr. IWRY. And the list of examples, which is not a complete list 

that we provided to the committee in our testimony last year in 

July and then again in letters to the committee, examples of past 

exercises of this well established authority under 7805(a) of the 

Tax Code, exercises the Treasury discretion, to give transition relief, that list of instances, and again, I am sure there are more 

than that. That wasn’t intended to be illustrative, are all instances 

where the Treasury concluded that there was a legitimate need for 

more time, that stakeholders who were affected, taxpayers who 

were affected by the law would be able to implement it effectively 

if they had more time, and in some cases, the tax system as a 

whole would need more time in order to—— 

Mr. MCDERMOTT. Let me interrupt you. My time is almost 

gone. 

I want to enter something in the record from the National Retail 

Foundation, which—or Federation, which represents 42 million 

Americans, and their tax counsel says ‘‘the Administration’’—this 

is a quote, ‘‘should receive a gold medal for recognizing the enormous complexities of the Affordable Care Act and its agility and 

flexibility in working with retailers and others in crafting these 

much needed common sense reforms and provisions. Continuing 

simplicity, streamlining, and clarification of the Affordable Care 

Act are in the best interest of the employers and the employees and 

the Administration and the Congress. The National Retail Federation will continue its constructive conversations with the Congress 

and the Administration itself, plus members, with compliance.’’ 

It sounds like at least one business organization, a fairly large 

one, thought you did a good job in working out what needed to be 

done, and I think that is really what is necessary for people to understand here. You are talking about 5 percent of employers are 

covered by this, since 95 percent have less than 50 employees, and 

95 percent of those already give coverage to their employees, so we 

are talking about a very small number of people who apparently 

the chairman hears from. I don’t hear from them, frankly. 

Chairman BRADY. Thank you, Doctor. Without objection, the letter will be introduced. 

[The information follows:] 


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f 


ralbany on LAP520R082 with HEARINGS21101.001
15 

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 


ralbany on LAP520R082 with HEARINGS
16 

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 


ralbany on LAP520R082 with HEARINGS
17 

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? 


ralbany on LAP520R082 with HEARINGS
18 

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? 


ralbany on LAP520R082 with HEARINGS
19 

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 


ralbany on LAP520R082 with HEARINGS
20 

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? 


ralbany on LAP520R082 with HEARINGS
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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 


ralbany on LAP520R082 with HEARINGS
22 

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 numVerDate Sep 11 2014 02:52 Sep 03, 2016 Jkt 021101 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21101.XXX 21101

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bers 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. 


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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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f 

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. 


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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:] 


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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 

Æ 


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