The Obama administration’s surprise announcement delaying the employer mandate of the Affordable Care Act until 2015 has raised many questions as uncertainty over the law’s future increased.
At issue is the so-called pay-or-play rule, a provision of the Affordable Care Act that would apply to any employee who works at least 30 hours per week at an employer who has the equivalent of more than 50 full-time employees. Under the law these employers could be faced with penalties:
- If they do not provide health benefits, they would pay a $2,000 penalty for each employee who qualifies for subsidized coverage and buys health insurance through the online marketplaces
- If they provide health benefits that cost more than 9.5% of an employee’s income, they would pay a $3,000 penalty for each employee who qualifies for subsidies who buys insurance through the exchanges.
The delay, which means companies with more than 50 employees won’t be required to provide their employees with health insurance until 2015, instead of 2014, was presented in a positive light by the White House, as a common-sense step that would reduce financial and regulatory burdens on small businesses.
While business leaders have expressed concern about the law, most were on track to meet the 2014 compliance deadline. The delay necessitates re-evaluation by employers. The delay also highlights the perception that the Affordable Care Act is cumbersome and difficult to implement. Many are now questioning what other portions of the law may be delayed or modified prior to implementation.