The requirement that businesses provide their workers with health insurance or face fines – a key provision contained in President Barack Obama’s sweeping health care law – will be delayed by one year, the Treasury Department said Tuesday, July 2nd.
The postponement came after business owners expressed concerns about the complexity of the law’s reporting requirements, the agency said in its announcement. Under the Affordable Care Act, businesses employing 50 or more full-time workers that don’t provide them health insurance will be penalized.
The Administration also announced it will suspend for one year reporting requirements in 2014 for larger employers to demonstrate compliance with a mandate to offer employees health insurance coverage.
According to Valerie Jarrett, senior advisor to the President, “In our ongoing discussions with businesses we have heard that you need the time to get this right. We are listening. So in response to your concerns, we are making two changes.
“First, we are cutting red tape and simplifying the reporting process. We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination. So we plan to re-vamp and simplify the reporting process. Some of this detailed reporting may be unnecessary for businesses that more than meet the minimum standards in the law. We will convene employers, insurers, and experts to propose a smarter system and, in the interim, suspend reporting for 2014.
“Second, we are giving businesses more time to comply. As we make these changes, we believe we need to give employers more time to comply with the new rules. Since employer responsibility payments can only be assessed based on this new reporting, payments won’t be collected for 2014. This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers.
“Just like our effort to turn the 21 page application for health insurance into a 3 page application, we are working hard to adapt and to be flexible in employer and insurer reporting as we implement the law.”
Jarrett also asserted that the Administration is “full steam ahead” for state health insurance exchanges to open on October 1, 2013. The complete announcement is available here.
Paul Hamburger, co-chair, employee benefits, executive compensation & ERISA litigation practice center with Proskauer Rose, LLP, said the news wasn’t entirely unexpected, “given the complexity of the rules and short compliance time frame.”
Hamburger’s colleague at Proskauer, James Napoli, leads the firm’s health care reform task force. He said the administration’s “decision to delay imposition of the penalties will certainly be welcomed news for employers who have been forced to make 100% decisions on ACA implementation with less than 100% information. The delay will also allow time for the rule makers to provide guidance on various notice and reporting requirements under ACA, and employers in turn will have additional time to implement the administrative infrastructure to meet those requirements.”
Meanwhile, here is a quick review of what small and big businesses need to know about the health law and how it will work:
- If you are a small business with less than 50 workers, the law’s employer shared responsibility policies does not apply to you. Instead, you will gain access to the Small Business Health Options Program that gives you the purchasing power of large businesses. In fact, you may be eligible for a tax credit that covers up to half the cost of insurance if you offer quality coverage to your employees
- If you own a business with more than 50 workers that already offers full-time workers affordable, quality coverage, you are fine
- And if you are a company with more than 50 employees but choose not to offer quality affordable coverage, you have been provided as much flexibility and transition time as possible to move to providing affordable, quality coverage to your workers.
Marketplaces will be opening on October 1. For more information on what is coming check out: HealthCare.gov