White House Delays Healthcare Reform’s Employer Responsibility Requirement

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On Tuesday, July 2, the White House announced (via the U.S. Department of Treasury blog) a one-year delay of the Affordable Care Act (ACA) mandate that requires employers with more than 50 employees to provide healthcare coverage or pay a penalty, according to published reports. This means the requirement will not go into effect until 2015. However, the requirement that all citizens acquire health insurance by January 1, 2014, has not changed.

The Treasury blog, noting concerns from employers about the complexity of reporting requirements, stated that the administration has “listened to your feedback.  And we are taking action.”

The blog noted that providing “an additional year before the ACA mandatory employer and insurer reporting requirements begin” would allow for simplification of reporting requirements and would “provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”  The blog post noted that within a week formal guidance describing the transition would be provided.

And while the New York Times referred to the delay as a “significant setback” for the President’s healthcare initiative, the Small Business Majority (SBM) noted in a press statement that the delay will have little impact on small business owners and their businesses and will not affect the creation of Health Insurance Marketplaces in each state, which are still scheduled to open for enrollment on October 1, 2013.

“Ninety-six percent of businesses in this country have fewer than 50 employees,” said Terry Gardiner, vice president, policy and strategy of Small Business Majority. “For these employers nothing changes because they were already exempt from the employer responsibility requirements. For larger businesses with more than 50 employees, 96 percent already offer insurance and we believe will continue to for business reasons. Only the four percent of larger employers that do not offer health insurance will be impacted by the delay in the penalty.” Gardiner added that the delay will provide these larger businesses the time to “adjust and provide additional input to the Treasury on how the proposed requirements will work best.”

Indeed, the National Retail Federation issued a press statement welcoming the delay. Vice President and Employee Benefits Policy Counsel Neil Trautwein said: “We commend the Administration’s wise move to delay the employer reporting and penalty obligations under the Affordable Care Act. This one-year delay will provide employers and businesses more time to update their healthcare coverage without threat of arbitrary punishment.”

Trautwein added, “NRF will continue to work with the Administration and Congress to ensure that healthcare reform implementation protects our members, small business owners, and the broader business community.”

However, the New York Times reported that, while the postponement “technically does not affect other central provisions of the law — in particular those establishing health insurance marketplaces in the states, known as exchanges … it threatens to throw into disarray the administration’s effort to put those provisions into effect by January 1.” Jim Napoli, senior counsel in the employee benefits practice at Proskauer Rose LLP, said that since the employer mandate was intended to support individuals’ health coverage, there may be a delay in the individual mandate as well, as reported by the Wall Street Journal.

Tara McGuinness, a senior adviser on the law for the White House, stressed that the delay does not limit “individuals’ eligibility for premium tax credits to buy insurance through the marketplaces.”