Reasons Behind the ACA Employer Mandate Delay

The Affordable Care Act employer mandate has been delayed by a year to 2015, announced the U.S. Treasury Department on July 2. The reprieve will give businesses some breathing room as they are now able to postpone offering worker health insurance for another year. Though the official reasoning behind the delay was to help businesses begging for more time, left unstated was the fact that the federal government hadn’t written key guidelines for employers, according to current and former administration officials, and computer systems that were supposed to run the program were not yet operational.

“The administration’s decision… to delay the implementation of the employer mandate is welcomed by the business community and will help avoid some serious near-term economic consequences of this law,” said U.S. Chamber of Commerce President and CEO Thomas Donohue in a statement.

The Affordable Care Act (ACA) passed in 2010, and was set to go into effect on January 1, 2014. It required businesses with over 50 full time workers to offer affordable healthcare to them. The ACA demanded employer coverage just for those who work over 30 hours per week for a period of a month. Depending on the size of the company and the state in which it’s located, a business may be able to buy a less expensive small group policy through a standardized insurance exchange. If a company has fewer than 25 employees but they choose to offer insurance anyway, the ACA will provide a tax credit to balance the price. Smaller companies also have more incentive to self-insure, in which the businesses take on the financial risk of offering health benefits to its workers. Rather than paying premiums to insurers, they pay claims filed by workers and health care suppliers. Larger corporations with hundreds of employees or more often self-insure as well because they have the cash on hand to pay the majority of the claims filed right away.

The government’s computer systems are being tested now, but experts say there’s no way to tell how well they will work before the launch October 1.

According to an official in Obama’s administration, the Treasury Department realized they couldn’t address concerns and questions raised by employers in time for the employer mandate to go into effect, so they had to push the date back. He said the postponement was caused partially by the limited staffing and the wait for the Supreme Court’s review results.

“They were so late putting out regulations, and even as of today they have not produced proposed regulations, they knew it was not realistic to expect employers and insurers to implement their system changes,” said Catherine Livingston, a former health care counsel at the IRS.

According to the Treasury, the latest change won’t affect the individual mandate which demands most taxpayers buy insurance or pay a government fine. The timeline hasn’t changed for the application of the individual and small businesses exchanges – which are marketplaces where people and business owners can shop for insurance at the state level. The Department of Health and Human Services insists they’re prepared to open the exchanges as planned.

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