The Obama Administration last month announced it would further delay the requirement that certain businesses provide health insurance to their employees, in some cases postponing the obligation until 2016, a full two years after the date originally set by the law.
The Affordable Care Act’s (ACA) so-called “employer mandate,” which applies to businesses with 50 or more employees, had originally been set to take effect in January, 2014, but was postponed until 2015 following pressure from the business community. In a February 10 announcement, the U.S. Treasury Department said it would again relax the requirements. Businesses with between 50 and 99 employees will now have until 2016 to provide health insurance to their employees.
In addition, businesses with more than 100 employees will now be allowed to comply over a two-year period. Most businesses with more than 100 employees already offer health insurance, the Treasury Department noted. But under the new rules, those that do not already provide health insurance will be required to offer it to just 70% of their employees by 2015 and 95% in 2016 and beyond. While only 2% of employers have more than 100 workers, these companies account for 66% of the private sector work force. The vast majority of businesses in the United States employ fewer than 50 people, and under the ACA they have never been subject to an employer mandate, something the Treasury Department stressed when making its announcement.
“While about 96% of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate,” said Assistant Secretary for Tax Policy Mark J. Mazur.
Republicans on Capitol Hill pilloried the news of the postponement of the employer mandate, accusing the Obama Administration of changing the law unilaterally. Administration officials countered that they have wide latitude to grant what is known as “transition relief” in implementing the law.
The announcement of the delay in the employer mandate has added to the pressure on the Administration to relax the health insurance obligations for individuals as well, or at least postpone the enforcement of a tax penalty for people who forego coverage. Health policy analysts, however, note that the employer and individual mandates have different functions, and that the individual mandate is crucial for the solvency of the ACA. Unless enough healthy individuals sign up, insurance companies will not be able to afford the law’s more expensive changes: a ban on denying insurance because of pre-existing conditions and a ban on dropping people from a policy when they get sick.