Employers now have until 2015 to comply with healthcare law

3 minute read

“We’re listening to businesses about the healthcare law” was the headline of a post on the White House blog yesterday. Presidential advisor Valerie Jarrett announced in the blog that the White House would extend until 2015 the deadline for employers to comply with the Affordable Care Act, and would meantime work to streamline the law’s reporting requirements.

Reports in TIME and CBS News are among those that suggest the delay is merely a midterm election maneuver designed to safeguard business votes for Democrats in 2014.

Others note that it translates to a multi-billion-dollar reduction in expected federal revenue for next year: noncompliant employers—those with more than 50 workers who do not provide health insurance—won't be assessed fines of $2,000 per employee until 2015. The Chicago Tribune reports:

"Tuesday's delay also raised questions about initial funding for Obamacare. The employer mandate is expected to raise $140 billion in revenues over the next 10 years, according to the nonpartisan Congressional Budget Office. CBO estimates the individual mandate will bring in another $45 billion.

'It does undermine some of the funding,' said Julie Barnes of the healthcare consulting firm Breakaway Policy. CBO forecast in May that the employer mandate would generate about $10 billion in revenue for federal fiscal year beginning October 1, 2014, rising to $20 billion a year in 2023."

Meanwhile, the Small Business Majority suggests that the policy change means little to most small business owners, and will only impact a small fraction of large ones.

But the Administration emphasized its sympathy with business. “As we implement this law, we have and will continue to make changes as needed. In our ongoing discussions with businesses we have heard that you need the time to get this right,” Jarrett wrote.

She suggested that the Administration would address businesses’ concerns by simplifying the law’s requirements for reporting on each worker’s access to and enrollment in health insurance. “We will convene employers, insurers, and experts to propose a smarter system and, in the interim, suspend reporting for 2014,” she wrote.

She added that,since employer responsibility payments can only be assessed based on this new reporting, payments won’t be collected for 2014.” The delay will allow employers time to test the systems and adapt their health benefits “while staying the course toward making health coverage more affordable and accessible for their workers,” according to Jarrett.

IRS Assistant Secretary for Tax Policy Mark Mazur echoed Jarrett’s comments in a Treasury Department blog post and promised that the IRS would publish formal guidance describing the transition within the next week. He added that the Administration “strongly encourages” employers to maintain or expand health coverage during the transitions period and that it will also strongly encourage employers, insurers, and other reporting entities to voluntarily implement the reporting requirements in 2014 in preparation for the full application of the provisions in 2015.

Jarrett also offered a “quick review of what small and big businesses need to know about the health law and how it will work”:

  • “If you are a small business with less than 50 workers, the law’s ‘employer shared responsibility policies’ does not apply to you. Instead, you will gain access to the Small Business Health Options Program that gives you the purchasing power of large businesses. In fact, you may be eligible for a tax credit that covers up to half the cost of insurance if you offer quality coverage to your employees
  • If you own a business with more than 50 workers that already offers full-time workers affordable, quality coverage, you are fine – we’ll work with you to keep that coverage affordable.
  • And if you are a company with more than 50 employees but choose not to offer quality affordable coverage, we have provided as much flexibility and transition time as possible for you to move to providing affordable, quality coverage to your workers.”

Small Business Majority vice president Terry Gardiner said in a statement that the delays won’t impact most small business owners. “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 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,” Gardiner stated.

Gardiner also noted that the “most important provisions for small business owners in the law are still moving full steam ahead, including health insurance exchanges.” The exchanges, which the Administration says are still on track to come online on Jan. 1, 2014, are supposed to allow small businesses to align with each other to purchase coverage as larger organizations. And small employers who offer coverage will be eligible for a tax credit of up to 50 percent of their premiums.