Obama Administration Delays Key Obamacare Provision For Employers

CREDIT: AP Photo/J. David Ake

On Monday, the Obama administration once again eased rules requiring large employers to provide their workers basic health benefits under the Affordable Care Act. Last summer, the White House delayed the enforcement of this provision for one year, after some firms said they wouldn’t be ready to expand coverage in 2014. Now, the administration is further delaying the mandate for medium-sized firms and easing requirements for larger ones.

Under the new rules, companies that have between 50 and 99 employees will have until 2016 to extend insurance to their employees if they don’t already do so. Larger companies with 100 or more workers can avoid paying a fine if they offer health care to at least 70 percent of their workers next year, and cover 95 percent of their workers in 2016.

“While about 96 percent of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate,” said Assistant Treasury Secretary for Tax Policy Mark Mazur in a statement. “Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees.”

Obamacare requires companies with 50 or more workers to provide a basic level of health benefits that cover, on average, at least 60 percent of an employee’s medical costs. Premiums for these plans cannot exceed 9.5 percent of a worker’s annual salary and the coverage must offer a multitude of benefits, such as prescription drugs. Companies that don’t comply with the requirements risk paying a $2,000 per employee fine for every worker after the first 30 workers who isn’t offered a policy.

Advocacy groups noted that the delay would have minimal effect on American firms and the health law’s broader objectives. “The news today that employers with 51-100 employees will not be required to provide insurance to their workers under the new healthcare law until 2016 does not impact the vast majority of small business owners,” said Small Business Majority CEO John Arensmeyer in a statement.

“Ninety-six percent of businesses in this country have fewer than 50 employees. For these employers nothing changes because they were already exempt from the employer responsibility requirements. For 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.”

That tracks with a study by the RAND Corporation last summer finding that only about 1,000 fewer companies — or 0.02 percent of all U.S. employers — would offer coverage to their workers in 2014 due to the original one-year delay of the employer requirement. RAND estimated that about 300,000 fewer workers are expected to have employer-sponsored plans in 2014 because of the delay, and just 0.4 percent of firms are expected to pay penalties for not offering any coverage. By contrast, about six million Americans are expected to gain coverage through Obamacare’s private insurance marketplaces alone in 2014 — a number that grows to almost 25 million over the course of the next decade.