Employers Get a Little Breathing Room With Postponement of Employer Mandate
A lack of guidance from the federal agencies responsible for implementing health care reform has been a chief complaint among employers.
As employers scrambled to meet looming deadlines under the health care reform law in hopes of averting a predicted disaster, the Obama administration hit the brakes on a key provision of the law.
In a surprise announcement on July 2, the U.S. Treasury Department said on its blog that enforcement of the employer mandate requiring employers to provide their workers with affordable health insurance is postponed until 2015.
"I was somewhat surprised, but it clearly looked like we were heading toward what Sen. [Max] Baucus called a train wreck," said Helen Darling, president of the National Business Group on Health. "When large employers institute any kind of change, even minor ones, they need at least a year's lead time and sometimes two. We've been feeling a growing anxiety that this wasn't going to happen. It's an enormous relief."
The employer mandate, also called the "pay or play" provision, was supposed to go into effect Jan. 1, 2014. The individual mandate requiring most Americans to purchase health insurance is still in effect for 2014.
Under the Affordable Care Act, companies with 50 or more workers face a fine of up to $3,000 per employee if they don't offer health insurance to full-time workers. But many employers say that determining who is a full-time employee and therefore eligible and whether their plans meet the law's affordability requirements is a complex and time-consuming process.
"There are a lot of steps to this," said J.D. Piro, a senior vice president at Aon Hewitt in Lincolnshire, Illinois. "The law was passed in 2010, but the nuts and bolts of it have only come down in the past six to eight months."
Indeed, the lack of guidance from the federal agencies responsible for implementing reform—namely the Treasury Department, Internal Revenue Service and Department of Health and Human Services—has been a chief complaint among employers.
"The irony is that employers don't know what they're grappling with because the government hasn't really been clear," Darling said. "They were not getting the details out of what the reporting requirements are."
She urges human resources practitioners and benefits managers to use the extra time to review any changes they were planning to make to their benefit plans for 2014 and determine if any modifications are needed.
While the delay gives employers some breathing room, they still need to figure out what to communicate to employees and what to report to the federal government, she said.
In addition to the individual mandate, the deadline for the establishment of state health exchanges remains on track. Starting Oct. 1, the health insurance marketplaces will be open for business, and employers are required to give workers information on where to go to sign up.