If you thought delaying the employer mandate until 2015 was a relief, wait until you see what the Obama Administration’s done now.
It has essentially decided to veer off course from that delay.
Instead, the administration’s decided to implement a new two-phase installation of the mandate, which will eventually require all employers with 50 or more “full-time equivalent” employees to provide “affordable” health insurance to 95% of those employees or pay federal penalties.
The new phase-in looks like this:
- Part 1 — Employers with at least 100 full-time employees will be able to avoid federal penalties if they offer affordable coverage to at least 70% — a change from 95% — of those workers by Jan. 1, 2015. The 95% requirement has been pushed back to the start of 2016.
- Part 2 — Employers with between 50 and 99 full-time employees will now be required to offer affordable coverage to 95% of those workers by Jan. 1, 2016 — a delay from 2015 — to avoid federal penalties.
As you can see, this gives medium-sized businesses yet another year to prepare for compliance.
The new rules, which were issued by the IRS and are slated to be published in the Federal Register in the coming days, caught many business groups and Congressional leaders by surprise.
More proof the law isn’t working?
The IRS said the new rules were issued to give businesses more time to come into compliance with the law.
Republicans, however, have a different take. They believe the Obama Administration issued further relief from the mandate in an attempt to defuse criticism of the Affordable Care Act until after the mid-term elections in the fall.
The employer mandate has been getting slammed by business groups and the GOP, even after the initial delay was issued in July.
The Congressional Budget Office (CBO) even joined the chorus of critics, as it released a scathing report about the effects of Obamacare on the American workforce just a few days ago.
The CBO report claimed the law amounts to an “implicit tax” of about 15% on workers that will cost 2.5 million jobs over the next 10 years.
These latest rule changes just add more fuel to critics’ fire. Republicans and business groups wasted no time referring to the latest delay as further proof the law is too cumbersome and harmful to be allowed to take effect.
In particular, the GOP said it was unfair to delay rules for businesses and not individuals, who are still required to carry insurance in 2014 or pay federal penalties.
Rules clarify other controversial issues
The new employer mandate phase-in rules weren’t the only things addressed in the new IRS rules.
In what may be a response to the new CBO report, the rules also said employers will be required to confirm they’re not cutting employees’ hours or laying off workers to avoid federal penalties under the employer mandate. But the IRS still has to issue specifics on how that rule will be enforced.
The rules also further defined which workers count as full-time equivalent employees, under the reform law.
For example, the IRS said:
- people who usually work fewer than six months in a year won’t be considered full-time, helping alleviate the concerns of some employers who rely heavily on seasonal employees
- volunteer firefighters and paramedics don’t need to be counted as full-time employees, delivering on a promise the Obama administration made on the issue
- the fact that some educators have summers off doesn’t exclude them from full-time status, and
- adjunct faculty members will be counted as having worked 2.25 hours for every hour they spend teaching in the classroom to help account for the work they do outside of the classroom.
Info: Federal Register