Employers with fewer than 100 workers won’t have to provide health insurance until 2016 under the Patient Protection and Affordable Care Act, as President Barack Obama’s administration said it will again delay a key requirement of the federal health law.
Larger firms will have to cover at least 70 percent of their workforce starting next year, the Internal Revenue Service said in a rule issued Monday. They will have to provide coverage to 95 percent of full-time workers in 2016. But other newly announced provisions, affecting technical issues such as the calculation of working hours, may help some of those firms.
As part of the Affordable Care Act’s expansion of U.S. insurance coverage, employers with 50 or more workers are required to provide health benefits to their employees. Under pressure from business groups, the Obama administration has weakened that requirement since July, first by delaying enforcement of the mandate until 2015 and then by giving some smaller firms even more time under Monday’s regulation.
Administration officials said Monday that the additional phase-in period for a crucial part of the law was necessary to help businesses adapt to the new requirement.
“While about 96 percent 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,” Assistant Secretary for Tax Policy Mark Mazur said in a statement. “Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees.”
House Minority Leader Nancy Pelosi, D-Calif., said, “This common-sense approach will protect employers already providing quality insurance, while helping to ensure that larger employers are prepared to meet their responsibility to their hard-working employees.”
According to a survey by the U.S. Department of Health and Human Services’ Agency for Healthcare Research and Quality, 43,422 full-time workers in Arkansas, or less than 6 percent of the 780,534 full-time workers in the state, worked at firms with 50 to 100 employees in 2012.
Firms with 100 or more employees accounted for 544,031 full-time workers, almost 70 percent of the total. More than 90 percent of employees at firms in either category were offered insurance by their employers.
In Arkansas, supporters of Arkansas’ expanded Medicaid program have said that extending coverage to adults with incomes up to 138 percent of the poverty level will help reduce the potential expense to small businesses that don’t offer health insurance to employees.
That’s because, under the health-care law, a company will not be penalized for having an employee who receives coverage through Medicaid.
A study by Jackson Hewitt Tax Service released last month found that 13,000 full-time Arkansas workers with incomes of 100 percent to 138 percent of the federal poverty level worked at companies with 50 or more employees that did not offer insurance that would be considered affordable under the healthcare law.
The law defines coverage as affordable if it would not cost more than 9.5 percent of an employee’s income.
If Arkansas scrapped its Medicaid expansion, the Jackson Hewitt study estimated, the potential penalty to employers in 2015 at $27 million to $40 million.
The rule issued Monday provides employers far more flexibility than allowed by the language of the health law, which levies fines of as much as $3,000 per worker against companies that don’t comply with the requirement.
Republicans have criticized Obama for appearing to unilaterally change the terms of the health-care overhaul for select groups, including employers and insurers. They have called on him to delay the law’s requirement that most individual Americans carry health insurance or pay a fine, which took effect Jan. 1. He has declined.
“Once again, the president is giving a break to corporations while individuals and families are still stuck under the mandates of his health care law,” House Speaker John Boehner, R-Ohio, said in a statement. “And, once again, the president is rewriting law on a whim. If the administration doesn’t believe employers can manage the burden of the law, how can struggling families be expected to?”
The Treasury secretary has broad authority under the tax code to implement laws such as the health-care overhaul in ways that will encourage compliance, including by phasing in requirements, senior administration officials told reporters in a conference call.
The Obama administration’s decision means many small businesses won’t have to worry about complying with the requirement when voters go to the polls for congressional elections.Republicans are using the troubled rollout of the health law against Democratic candidates in this year’s campaigns.
“It is clear Democrats don’t think they can survive politically if Obamacare is allowed to fully go into effect,” said Rep. Dave Camp, R-Mich., who as chairman of the Ways and Means Committee oversees the tax penalties enforcing the mandate.
“Let’s just say the politics, the policy and the stars all aligned at a propitious time and have brought what appears, at least on the surface, to be a pretty darned good approach,” said Neil Trautwein, vice president of the National Retail Federation.
Trautwein’s group and other business organizations have lobbied the administration for further relief from the law’s coverage requirement. The degree of flexibility the government will allow surprised him, he said.
“I am pleasantly astounded,” he said. “In the context of the ACA, this is an extraordinarily pragmatic and wise approach to accommodate the law to the real world.”
Randy Zook, president of the Arkansas State Chamber of Commerce, said the delay is a welcome reprieve.
“Anything that postpones added costs for Arkansas businesses is fine by us,” Zook said.
Arkansas Surgeon General Joe Thompson said the announcement demonstrates the Obama administration’s commitment to phasing in the employer mandate, which he said is important to keeping businesses involved in the health-insurance market.
“I was actually concerned that they would delay the entire employer mandate,” Thompson said.
But the U.S. Chamber of Commerce was unimpressed, calling it more of a respite than a fundamental change.
“This short-term fix also creates new problems for companies by moving the goalposts of the mandate modestly when what we really need is a time-out,” President Thomas Donohue said in a statement.
Among other exemptions, the administration said in the rule issued Monday that employers won’t have to cover seasonal workers, those employed less than six months.
Employers with fewer than 100 workers will have to certify to the government that they haven’t fired workers to get under the threshold and qualify for the delay until 2016. They also must certify they won’t drop health plans they already offer, officials said.
In other provisions announced Monday, volunteer firefighters and others who give of their time will not be considered employees under the law. Some volunteer fire departments worried they might have to shut down if forced to provide health insurance.
Adjunct faculty members at colleges will be deemed to have worked two hours and 15 minutes for each hour of classroom time they are assigned to teach. Officials said that means someone teaching 15 hours a week in the classroom would be considered “full time” and eligible for coverage, but someone teaching 12 hours might be considered part-time.
The health law, passed solely with Democratic votes in Congress in 2010, is intended to provide insurance for many of the 48 million people who were without health coverage. Among its major provisions,the law banned insurers from denying coverage to those with pre-existing medical conditions, allowed adults younger than 26 years old to remain on their parents’ health plans, expanded the Medicaid program for the poor and created insurance marketplaces for Americans to buy coverage with government subsidies.
About 3 million people had signed up for private health plans using the new exchanges as of Jan. 24. An estimated 1.7 million more people have gained coverage from Medicaid through December, said Peter Gosselin, a Bloomberg Government senior health analyst.
Information for this article was contributed by Alex Wayne of Bloomberg News, Ricardo Alonso-Zaldivar of The Associated Press, Noam N. Levey of the Tribune Washington Bureau and Andy Davis of the Arkansas Democrat-Gazette.
Front Section, Pages 1 on 02/11/2014