The Obama administration will delay implementation of the Affordable Care Act’s employer responsibility requirement, Bloomberg reports.
Under the provision, which was partly crafted by former Republican Senator Olympia Snowe (ME), large employers with more than 50 employees that don’t provide adequate insurance coverage must pay a fee of $2,000 per employee after the first thirty workers. Businesses will also be assessed a penalty if they offer unaffordable coverage that forces employees to spend more than 9.5 percent of income on insurance. In that case, the employee can apply for government subsidized coverage in the exchanges and the employer pays a fine.
Officials will not enforce the mandate until 2015, two administration officials told Bloomberg, “in order to simplify reporting requirements and give businesses more time to adapt their health-care coverage.” Mark J. Mazur, Assistant Secretary for Tax Policy, explained the decision in a post on the Treasury Department’s blog:
This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees. Within the next week, we will publish formal guidance describing this transition. Just like the Administration’s effort to turn the initial 21-page application for health insurance into a three-page application, we are working hard to adapt and to be flexible about reporting requirements as we implement the law.
Administration officials predict that the delay won’t cause employers to drop coverage, since businesses would still face a penalty in 2015. The Congressional Budget Office had projected the employer penalty would raise approximately 10 billion in 2015. The delay will mean that the federal government will lose out on that revenue and that some employees who are not eligible for tax credits in the exchanges and don’t have an offer of employer coverage or can’t afford that insurance, could go uninsured. Others could enroll in the exchanges, increasing the size of that population.
The announcement comes after some employers publicly complained that the requirement will cause them to drop insurance coverage, increase costs, and lay off workers.
In April, the Obama administration announced that small businesses buying insurance from so-called SHOP exchanges — marketplaces that are designed to offer employers and employees a range of private insurance options — won’t be able to choose a range of plans until 2015.
Edwin Park of the Center for Budget and Policy Priorities predicts that this “probably should have little effect on coverage in 2014,” since the biggest increases are “primarily due to increased participation from the individual mandate, not from the employer responsibility requirement getting employers to offer or continue to offer.” “That’s because the employer mandate applies to larger employers who are already offering and likely would continue to offer with or without the penalty.”
From the Small Business Majority: “For larger businesses with more than 50 employees, 96 percent already offer insurance and we believe will continue to for business reasons. Only the 4 percent of larger employers that do not offer health insurance will be impacted by the delay in the penalty.”