The Obama Administration’s decision to delay until 2015 a key requirement of the Affordable Care Act that larger businesses offer health insurance will temporarily give businesses in Memphis and elsewhere in the nation a reprieve.
The U.S. Treasury Department said the delay in the Affordable Care Act will “make sure it is easy” for businesses to provide health insurance.
(Library of Congress)
“I think it is welcome for a lot of employers because it does give them more time to make sure they are in compliance with the law,” said Craig Cowart, a partner with Fisher & Philips LLP.
The law requires employers with more than 50 employees to pay penalties starting at $2,000 per worker if they don’t provide affordable coverage to their employees, while smaller firms are exempt from the employer responsibility mandate.
“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so,” the Treasury Department said in a statement on July 2.
The Obama Administration said the delay will allow the government to “consider ways to simplify the new reporting requirements” and “to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible to their employees.”
While the reporting requirements don’t kick in until 2015, administration officials said they still strongly encourage employers to voluntarily report this information in 2014 and to maintain or expand access to health care coverage. The employer mandate delay does not affect the individual insurance mandate, the requirement that most Americans purchase health care insurance or pay a penalty. It also does not stall the roll out of marketplaces where individuals and small businesses can shop for insurance coverage beginning Oct. 1.
Some employers on the cusp of 50 employees have requested clarity from regulators on how to calculate the number of full-time employees and full-time equivalents. Under the health care law, employers are required to count all employees who work more than 30 hours per week and adding that figure to the number of full-time equivalents (determined by taking an employee’s total part-time hours for the month and dividing that figure by 120).
“It does give them more time to make sure they are in compliance with the law.”
–Craig Cowart, Fisher & Philips LLP
Employers can always control the number of hours their employees work, but those that try to change the employment status of workers to avoid the Affordable Care Act could be in violation of the health care law’s new whistleblower protections, Cowart said.
“The issue is that now that it is delayed another year, there can’t be interpretations about how those provisions are going to work until there is some kind of lawsuit,” he said. “It’s difficult to understand how some of these provisions are going to work.”
The decision to delay the employer mandate has thrilled some business leaders, but most don’t see employers running out to hire more workers.
UBS analyst Drew Matus told Business Insider the delay could have a “mild positive effect” on payrolls, but the delay brings new risks that only add to the uncertainty facing businesses. That could delay major hiring decisions and plans to cut back or increase employee hours until there is more certainty.
Still, Fisher & Philips’ Cowart said most employers already have implemented key provisions of the Affordable Care Act and that a relatively small number of employers are likely to be affected by the delay. He says employers who haven’t implemented the ACA mandate obligations should use the extra time to make sure they are in compliance with the law now, rather than down the road.
“I don’t want to see employers putting this issue back on the shelf for another year,” he said. “I hope employers will use this year to make sure they are complying and to make sure they are doing it in the best way for their business.”