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Delaying Workplace Coverage Requirements

Posted on Jul 04, 2013 by Ailee Slater ()  | Tags: Affordable Care Act, employer mandate, insurance penalties, obamacare, U.S. health care, U.S. health insurance, workplace health insurance

Up to this point, most policies of the Affordable Care Act (ACA) have been implemented according to their scheduled timeline - in 2010, existing insurance plans had to cover dependents 26 years and younger; in 2011, Medicare patients saw a 50 percent discount on brand name prescription drugs; and in 2012, a new tax was created for private insurance plans. However, just this week the White House announced that it will delay the arrival of one important ACA policy - taxing employers who don't provide workplace coverage for their workers.

When it was made into law, the ACA stated that all large employers (defined as businesses with 50 or more employees) were required to offer health insurance coverage to every worker, or else pay a fine. The fine would be calculated by taking the total number of full time employees, subtracting 30, then multiplying the result by $2,000. According to the original ACA text, passed in 2010, large employers would begin paying this fine in 2014.

On July 2, however, the Obama administration released a statement through the U.S. Department of Treasury, announcing that large employers would not need to worry about the insurance coverage requirement, or potential fine, until 2015; an entire year later than the deadline originally specified by the Affordable Care Act.

Commonly known as the Employer Mandate, this worker coverage penalty rule has been postponed for a number of reasons. According to the statement from the U.S. Department of Treasury, businesses across the country have been requesting more time and more resources in order to meet ACA minimum coverage requirements - large employers say that they still need at least another year to find the best way of getting health insurance to employees. Also, many employers have complained about the difficulty of becoming familiar with new tax procedures; arguing that one more year is necessary in order to properly work out how to report details of workplace health coverage to the federal government.

With the Employer Mandate being delayed for another year, the White House says that it will use this additional time to simplify insurance reporting procedures for large employers. Therefore, by the time that the Employer Mandate becomes law, businesses will be better able to understand and report the insurance status of workers. The Obama administration has also indicated that this one year delay will give large businesses more time in which to find and implement affordable, adequate health insurance for their employees; avoiding the need to pay fines in the future.

The announcement of the Employer Mandate delay had been met with both praise, and surprisingly strong criticism. Those in favor of delaying the Mandate for another year include employer groups such as the National Retail Federation. In a statement released this week in response to the federal government's announcement, the National Retail Federation's vice president commended the administration's decision to give large businesses more time to adapt their coverage policies to fit the new law, before asking for large fines to be paid. Even the U.S. Chamber of Commerce expressed its approval for delaying the Employer Mandate in order to give businesses a chance to get clear on all the rules.

At the same time, many individuals and organizations have come forward to criticize this delay of the Employer Mandate. Many Republicans, already wary of the ACA's costs and feasibility issues, say that putting off the Employer Mandate rule is proof that the Affordable Care Act will never be properly implemented. Speaker of the House of Representatives, John Boehner of Ohio stated that delaying the Employer Mandate is proof that the ACA is "unworkable," and called for a repeal of the entire policy.

Other Republicans, such as Orrin Hatch of the Senate Finance Committee, have pointed out that it is unfair for the White House to offer businesses an additional year to cover employees, while not giving individuals and families that same chance. After all, if large businesses are having difficulties understanding the new health coverage requirements, surely individuals might struggle as well. As the law stands, individuals must have insurance coverage starting in January, 2014, or pay an annual fine to the federal government. In 2014, an individual without health coverage (whether gained through Medicare, Medicaid, the workplace or other means) must pay $95. Starting in 2016, that penalty will increase to $695 per adult, $347.50 per child or up to $2,085 per family.

Is the Employer Mandate delay a major setback to Obama's health care law, or just a simple, smart concession in order to help the law function better in the future? The verdict is varied, but for the time being, all that large employers can do is study up on their Affordable Care Act know-how, and figure out how best to meet employer coverage requirements when they come into effect, one year later than expected, in 2015.

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