Businesses with 50 or more full-time equivalent (FTE) employees that don’t provide employee health insurance now have an extra year—until 2015—to either get insurance or face a penalty, U.S. officials announced on Tuesday.
The postponement will surely relieve many business owners who were scrambling to comply with the federal health-care law’s mandate, which was originally supposed to take effect on January 1, 2014. However, the delay may not be welcome news for everyone.
Here’s a look at the pros and cons of the mandate’s delay for small-business owners:
More time to comply. Businesses with 50 or more FTE employees that don’t provide health coverage no longer have to worry about being penalized in 2014. Fines for noncompliance—now scheduled to start in 2015—could add up to $2,000 to $3,000 per employee for some businesses, according to an analysis by the National Federation of Independent Business. That means employers have more time to explore their options on the federally or state-run health insurance exchanges, which are still supposed to go live on October 1. (Whether the exchanges will launch on schedule is subject of debate, given recent reports from the Government Accountability Office showing that some aspects are running behind schedule.) “The administration has finally recognized the obvious—employers need more time and clarification of the rules of the road before implementing the employer mandate,” Randy Johnson, a senior vice president at the U.S. Chamber of Commerce, said, according to The New York Times.
More time to understand reporting rules. Along with the mandate, businesses also faced new reporting requirements about their employee health coverage. Those rules, which had frustrated many business owners, are now postponed until 2015 as well.
Change of plans. Some businesses were already taking significant measures—such as cutting staff and relying more on part-time workers—in hopes of avoiding Obamacare’s employer mandate. In hindsight, those actions may now seem unnecessary and businesses may need to reevaluate their 2014 game plans since they have another year before worrying about complying with the employer mandate.
2014 coverage could get costlier for some. Some insurance experts fear that delaying the employer mandate could spell higher insurance premiums in 2014, according to Bloomberg. While individuals will still be required to have insurance starting next year, the employer mandate promised to help reduce premiums, particularly on the Small Business Health Options Program (SHOP) exchanges. Already, as I previously reported, few insurers had signed up to provide coverage to small employers on some state’s SHOP exchanges.
A political setback for Obamacare. The employer mandate was a key piece of federal health-care reform plans. Its delay may be construed as a major setback for the Obama administration and give momentum to opponents. “It will open floodgates to arguments that the rest of the law should be delayed as well,” writes a conservative blogger for The Washington Post.
The overall effects of the employer mandate’s delay remain to be seen. Meanwhile, some experts (such as this New York Times blogger) argue the delay will have little effect at all, as studies show that 95 percent of businesses with 50 or more employees already offer employee health coverage.
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