Companies with 50 to 99 employees won't have to offer minimum coverage until 2016.
On Monday, the Obama administration announced another delay in rolling out the Affordable Care Act, softening the requirement to offer coverage next year for large employers and postponing it for smaller ones. Here's what it means.
Last summer, the administration delayed the deadline a year from January 2014 to January 2015 for companies employing at least 50 employees, after hearing complaints from businesses who would have been penalized for not offering healthcare coverage to their employees.
In this second big change, the deadline has again been moved out a year. Companies with 50 to 99 employees won't have to offer minimum coverage until 2016. And companies with at least 100 employees are required to offer minimum coverage to only 70 percent of their workers, down from a previous target of 95 percent by 2015.
Companies most affected are those in the 50-to-99 employee slot and large retailers and restaurant chains, many of which don't offer coverage to many employees now.
"For the majority of large employers ... neither the employees nor the employer are going to see that much of a difference," says Steve Wojcik, vice president for public policy at the National Business Group on Health, a big-business coalition. 1
Even though many do offer coverage, employers with staffs under 50 have always been exempt from the coverage requirement. For those growing companies teetering just under 50, who have been reluctant to go over the 50-employee threshold, two more years of reprieve may make them feel freer to hire.
"I imagine we'll have some employers in that space who were not offering coverage before and were gearing up to offer it in 2015," said Edward Fensholt, director of compliance services for Lockton Benefit Group. "They'll probably be delighted with the delay." 1
For those employees working a flexible schedule for these companies, access to company health coverage is delayed -- but it also might mean a delay in their hours being cut. The target companies will be required to offer healthcare coverage for all employees working 30 or more hours a week. Analysts anticipate that once the time comes, these companies, mostly big-box retail chains, hotels, and restaurants, will be cutting employees' hours in order to avoid offering coverage for all.
It's also interesting to note that the individual deadline still applies, so, even if employees work for companies who slide in under the new 2016 deadline, they still must sign up for healthcare coverage under the exchanges by March 31, 2014 to avoid being penalized -- unless they qualify for an exemption. Will the individual deadlines be delayed, too? And you have to wonder how the administration would enforce penalties on individuals.
"How are you going to penalize people who didn't make it through the system?" wonders Joseph Antos, a healthcare economist at the American Enterprise Institute. 1
The challenge here is that insurance companies need as much participation as possible to make individual coverage financially sustainable.
The challenge here is that insurance companies need as much participation as possible to make individual coverage financially sustainable. If the individual deadlines were extended, would the whole ACA come tumbling down?
As a result, individual voters might not be so kind come November.
"It's hard to explain to the electorate that [postponing the individual mandate] would subvert the risk pool," said Dan Mendelson, head of consultant Avalere Health. 1
...And the political wrangling continues in this far from settled saga. Sure, the National Retail Federation's Neil Trautwein said the administration should get "a gold medal" for "its agility and flexibility" in working with employers. 1
But the new 2016 deadline doesn't affect that many companies. And it delivers fuel to the fire for opponents who say the law is not viable.
[Opposing] "employers know they have the administration on the run," said Robert Laszewski, an insurance consultant and former industry executive. "Putting this off one more year isn't going to mollify them. They are more mad now because they are more convinced they are right." 1
In the grand scheme of things, the idea of everyone having access to affordable healthcare is noble -- yet as always, the devil is in the details. Stay tuned!
1 Kaiser Health News, Washington-Watch "Q&A on the Latest Affordable Care Act Delay" Published: Feb 11, 2014 | Updated: Feb 12, 2014
By Jay Hancock, Julie Appleby, and Mary Agnes Carey
Rylan Klaseen & Associates
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