The U.S. Department of the Treasury this week announced a year’s delay in the Patient Protection and Affordable Care Act’s employer mandate. The delay impacts only the employer mandate portion of the law, not requirements for individuals to purchase coverage.
Writing on the department’s official Treasury Notes Blog, Mark J. Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, explained:
Over the past several months, the Administration has been engaging in a dialogue with businesses – many of which already provide health coverage for their workers – about the new employer and insurer reporting requirements under the Affordable Care Act (ACA). We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively.
For U.S. small businesses with fewer than 50 full-time employees, this change doesn’t directly impact them – as employers. That’s because businesses with under 50 employees were not subject to the employer mandate provisions in the first place.
Of course, the vast majority of U.S. small businesses have fewer than 50 employees. Most have fewer than 20.
But for businesses with more than 50 full-time employees, it gives you a brief reprieve. The delay effectively means small businesses with more than 50 employees now have another year before being required to either provide government approved health benefits to employees or face a $2,000 per-employee penalty. Instead of complying in January of 2014, businesses have until January of 2015.
And for solopreneurs or owners of single-person businesses, you may be required to purchase government-approved healthcare next year as an individual. If you don’t, you may face a penalty as an individual.
Small Business Groups Respond
As a Wall Street Journal editorial observes, the delay causes uncertainty and confusion for businesses. The Wall Street Journal’s editorial board was a particularly harsh critic yesterday about the recent delay, noting:
“These columns fought the Affordable Care Act from start to passage, and we’d now like to apologize to our readers. It turns out we weren’t nearly critical enough. The law’s implementation is turning into a fiasco for the ages, and this week’s version is the lawless White House decision to delay the law’s insurance mandate for businesses, though not for individuals.”
The Journal suggests the delay is a political move designed to get past this fall’s election season. The Board even suggests further political maneuvering to deal with it.
Unfortunately, political maneuvering doesn’t help businesses — not to mention their employees. While politicos battle it out in Washington, “Main Street” and the people who live there have to figure out what it all means to them.
Business advocacy groups have been speaking out. Let’s cover just some of the reactions in the past 48 hours:
The NFIB used it as an opportunity to call for more evaluation of a law they say will ultimately harm small businesses. “This is simply the latest evidence that implementation of this terrible law is going to be difficult if not impossible, and the burden is going to fall on the people who create American jobs,” said Amanda Austin, Director of Federal Public Policy for the National Federation of Independent Business. “Temporary relief is small consolation. We need a permanent fix to this provision to provide long term relief for small employers.”
The IFA expressed more happiness about the delay, but also called for reexamination. “We applaud the administration for responding to our repeated requests to provide relief from the implementation of the Affordable Care Act,” added International Franchise Association President and CEO Steve Caldeira. “This will relieve the onerous and costly burdens of the ACA for one year, and allow the Administration to reexamine its implications for small businesses. We look forward to continuing our work with the Administration to ensure that the Affordable Care Act is implemented with minimal negative impact on franchise small business owners.”
The Council of Smaller Enterprises, an Ohio small business group, focused on the need to help educate employees to make the right choices. In an email update to COSE members, it noted:
“While this delay mostly impacts businesses of 50 or more FTEs, it does not change the mandate requiring individuals to have health insurance coverage starting in 2014. In short, while a small business does not need to provide health insurance and will not face penalties, employees are still required to have coverage. Despite a small business’s choice to offer or not offer health insurance to its employees, it will be important for employers to provide help and guidance to their employees through reform.
COSE Board Chair Sharon Toerek says, “While this announcement has more of an impact on larger businesses, the one-year delay will give businesses of all sizes more time to prepare and make the right health insurance decisions.” “
Applying the Mandate in Practice
Regardless of your political leanings or what you may think of Obamacare, the delay does give businesses breathing room. And breathing room is what some need, because the law is complex.
Larry Meigs, CEO of Visiting Angels, a franchise supplying adult in-home care, with 450 plus offices in 45 U.S. states, says there are many details for business owners to sort through.
“The Affordable Care Act affects our business more than it does many other businesses,” Meigs said in an interview with Small Business Trends.
That’s because the product and service the company’s franchise owners market is their employees’ time, something that cannot be scaled back to cut costs.
Meigs says the most complicated part of compliance is that many franchise owners in his company have employees whose hours vary considerably from full-time to a varying number of part-time hours.
But the law requires that businesses determine whether the hours worked by part-timers make up the equivalent of having 50 full-time employees. If they do, the business is still required to supply health benefits or face a per employee penalty, Meigs said.
He said the company is encouraging franchise owners to provide the insurance coverage if required rather than pay the penalty since providing a plan will help with employee retention. “Our theme for our industry is, offer coverage,” Meigs added.
More Information on Employer Mandate
Still wondering how the employer shared responsibility provision of the Affordable Care Act applies to your business when it finally does go into effect Jan. 1, 2015? Paychex has created a good information center to help you figure it out, including calculators.
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I still have a tough time with the government mandating individuals have health insurance AND mandating businesses provide health care to employees. The system is inherently broken if you have to force people into it to make it work.