The White House will delay enforcement of a requirement for businesses to provide workers health insurance under the Affordable Care Act, the Treasury Department said today.
More detail is set to come later in the week.
The mandate would require most businesses with 50 or more full-time employees to provide health insurance meeting certain minimum criteria — or pay a penalty of $2,000 per worker.
The purpose of the employer mandate is to discourage employers from dropping coverage and leaving employees to buy subsidized insurance in the Obamacare exchanges at greater taxpayer expense.
In the absence of a mandate next year, Treasury says it will “strongly encourage employers to maintain or expand health coverage.”
If firms respond to this delay by dropping health coverage or waiting to expand it, the cost of Obamacare to taxpayers is likely to increase.
The mandate has been bitterly opposed by many large companies that employ low-skill workers, especially those that compete with small firms that will not have to comply. Executives and franchisees at restaurant chains such as Papa John’s have been especially vocal.
Here’s the Treasury’s official statement from Mazur:
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. We recognise that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action.
Here is some additional detail. The ACA includes information reporting (under section 6055) by insurers, self-insuring employers, and other parties that provide health coverage. It also requires information reporting (under section 6056) by certain employers with respect to the health coverage offered to their full-time employees. We expect to publish proposed rules implementing these provisions this summer, after a dialogue with stakeholders – including those responsible employers that already provide their full-time work force with coverage far exceeding the minimum employer shared responsibility requirements – in an effort to minimize the reporting, consistent with effective implementation of the law.
Once these rules have been issued, the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.
We recognise that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.
During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage. Also, our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA).
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