Latest Health Care Implementation Delay Benefits Small Business

Employers with 50 to 99 full-time workers get reprieve until 2016

Published in CSP Daily News

WASHINGTON -- The Obama administration on Monday again delayed the Affordable Care Act (ACA, or "ObamaCare") requirement that all but the smallest employers provide health insurance coverage to full-time workers by giving medium-sized businesses another year to comply.

Under ObamaCare, the employer mandate--which has been opposed by businesses--was originally supposed to take effect in January. But the administration granted a one-year delay in July. The latest change, published in a 227-page final rule, allows medium-sized businesses with 50 to 99 full-time workers to avoid a tax penalty until 2016 for failing to offer health insurance. It also allows larger employers to phase in coverage by offering a health plan to 70% of their full-time workforce next year, rising to 95% in 2016.

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) on Monday issued final regulations implementing the employer responsibility provisions under the ACA.

Under the ACA, companies that have fewer than 50 employees (about 96% of all employers) are not required to provide coverage or fill out any forms in 2015, or in any year.

Companies with 50 to 99 employees (about 2%) that do not yet provide health insurance to their full-time workers will report on their workers and coverage in 2015, but have until 2016 before any employer responsibility payments could apply.

Companies with 100 or more employees (about 2%) already offer coverage. The new rules phase in the percentage of full-time workers that employers need to offer coverage to from 70% in 2015 to 95% in 2016 and beyond. Employers in this category that do not meet these standards will make an "employer responsibility payment" for 2015.

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"I am quite pleasantly surprised," Neil Trautwein of the National Retail Federation (NRF) told Reuters. "This is beginning to look more like something the business community can live with."

But the change triggered another wave of Republican calls to postpone Obamacare's mandate for individuals, which requires most Americans to enroll in coverage by March 31 or pay a penalty in their 2014 income taxes.

Analysts said the change could help vulnerable Democrats in November's midterm elections battle for control of Congress by delaying a potential crescendo of complaints from small-business leaders, a theme Republicans also picked up on, said the report.

Medium-sized businesses employ about 7.9 million people in the United States, according to the news agency, citing data provided by the Treasury Department. That number is dwarfed by the 31.3 million employed by firms with fewer than 50 full-time workers and another 74.3 million who work for companies with 100 employees or more.

Thomas Donahue, president and chief executive of the U.S. Chamber of Commerce, said other steps were necessary to reduce, "the significant harm this law is inflicting on businesses of all sizes."

"This short-term fix also creates new problems for companies by moving the goal posts of the mandate modestly when what we really need is a timeout," Donahue told Reuters.

Treasury officials described the mandate's two-year phase-in for larger employers as a gesture to help companies cope with a new definition of full-time employment that begins with an average of 30 hours a week rather than the traditional 40 hours. The regulation also allows employers to determine whether an employee is full-time by averaging work hours over a period of up to 12 months.