The Fallout of the Employer Mandate Delay

falloutobamacareThe White House has decided to postpone the employer mandate, the rule that says large employers with 50 or more full-time equivalent workers must offer qualified, affordable coverage or pay a penalty.

Employers Get More Time to Prepare

Julio Portalatin, president and CEO of Mercer said, “The delay will give employers more time to cope with some of the requirements, but they know it’s no free pass. We expect employers to stay 100% focused on cost management.”

Mercer expects employers to continue preparing for compliance. In a May survey by Mercer, about a fourth of employers hadn’t decided how they would track and report variable employee work hours and a third hadn’t decided which look-back period to use.

About a third of employers do not offer coverage to employees working 30 0r more hours a week. Many of these employers have already made plans offer the coverage in 2014. “Most have not announced changes yet, and if they have an extensive part-time work force, the money to be saved by not expanding coverage in 2014 could be considerable,” said Tracy Watts, a Mercer senior partner.

Janet Trautwein, CEO of NAHU said that delaying the mandate will allow businesses that are recovering from the recession to make sound business decisions in complying with the law without fear of significant financial penalties in the first year of changed operations. Trautwein noted that about 98% of all large employers in the United States already offer coverage.

Private Exchanges May Get a Boost

According to Mercer, the delay creates a gap year for employees that had been enrolled in mini-med plans, which cannot be offered after the end of the 2013 plan year. This may give employers another reason to offer a private health exchange in 2014. Employees who don’t qualify for subsidies in the public exchanges can purchase lower cost medical plans and supplemental medical benefits through a private exchange. Because employers don’t have to make their coverage affordable for another year, employers can choose whether, or how much, to contribute to the cost of coverage.

California Insurance Commissioner Dave Jones said, “Over 92% of California employers with more than 50 employees already offer health insurance…We anticipate that they will continue to do so…even without the existence of a penalty…The requirement that large employers provide health insurance to their employees is an important component of ObamaCare and the Administration should make sure that this provision can be implemented in 2015. In the meantime, uninsured workers will be able to purchase health insurance through the California health benefit exchange.”

Employers Are Less Likely to Cut Hours

According to an analysis by Jackson Hewitt Tax Services, the one-year delay may make employers less likely to cut employee hours below 30 hours per week in order to classify them as part-time. With the one-year delay, some employers may postpone offering any coverage to dependents. Interestingly, this may have a positive effect on such families.  First, children without an offer of employer-sponsored coverage may be eligible for the Children’s Health Insurance Program (CHIP) if they meet income and other eligibility requirements. They may also be eligible for the new premium assistance tax credits in 2014 even if the household income is above the state-specific CHIP limit. Employers may be more likely to cooperate with enrollment efforts to get uninsured employees and their uninsured dependents covered under various ACA programs because they know that they won’t face a penalty in 2014.

Less Pressure to Expand Medicaid

States may have less pressure from business interests to expand Medicaid.  A Jackson Hewitt report estimates that employers would incur $876 million to $1.3 billion in penalties in 22 states that are refusing to expand their Medicaid programs.  The delay in the mandate removes that penalty liability for 2014.  However, employers in these states will face the penalties in 2015.

Health Exchanges Are Still on Track

Brian Haile of Jackson Hewitt said that the delay alleviates several key concerns among employers with a significant part-time and seasonal workforce. Regardless of the delay in the mandate, “We continue to expect the launch of the health insurance marketplaces on October 1, 2013,” he said.

President’s Motives Questioned

Mark Mazur, the Assistant Secretary for Tax Policy at the  Treasury Dept. said the delay, “Will allow us to consider ways to simplify the new reporting requirements…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.”

Benjamin Domenech says that the delay in the employer mandate is simply an attempt to prevent the implementation of President Obama’s signature domestic policy until after the midterms. “He knows how unworkable his health policy overhaul is; he just doesn’t want to suffer the political consequences while in office. Congress passed the employer mandate into law, and the executive branch is now refusing to enforce it. This is nothing more than rule by regulators attempting to slow the train wreck until they’re out of power and don’t have to answer for their bureaucratic mismanagement.”

Consumers Want An Obamacare Health Insurance Waiver Too

Following the administration’s decision to delay the employer mandate penalty, 41% of consumers say that the same temporary waiver should apply to uninsured individuals, according to a survey from HealthPocket. The majority of adult Americans face penalties if they are uninsured. Fines are scheduled to take effect in 2014. The penalty for not being insured is intended to maximize the number of healthy people in the insurance pool, thereby lowering both insurers’ risk base and health insurance premiums. The 2014 fee for uninsured individuals is 1% of their annual income or $95, whichever is higher. The penalty increases annually until reaching $695 or 2.5% of annual income, whichever is highest. There is a cost-of-living adjustment after 2016 based. For more information, visit www.HealthPocket.com.

Last Updated 10/21/2020

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