Obama Administration Delays Health Insurance Mandate for Large Employers Until 2015

The Obama Administration announced on July 2 that it was delaying until 2015 implementation of the requirement that employers with 50 or more employees provide qualified health insurance for their employees, or pay a penalty. The announcement, which came from the Treasury Department, noted that the Administration had “heard concerns about the complexity of the requirements and the need for more time to implement them effectively.”

Further Proposed Regulations

The Treasury statement noted specifically that the administration expects to issue proposed regulations this summer that (1) would implement sec. 6055 of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), regarding information reporting by insurers, self-insuring employers, and other parties that provide health coverage; and (2) would implement sec. 6056 of PPACA, which requires information reporting by certain employers with respect to the health coverage offered to their full-time employees. After these rules are finalized, the Administration hopes that most large employers will voluntarily report this information in 2014, before the reporting requirements are fully implemented in 2015.

Since the mandate is being delayed, the shared responsibility payments (the penalties for not providing coverage in 2014) will not apply until 2015. According to the Congressional Budget Office, the employer’s portion of the shared responsibility payments would have generated $10 billion in 2015 based on the number of employers expected not to have provided coverage in 2014; with the mandate delayed a year, this source of revenue will likely disappear in 2015.

There are only a small number of employers with more than 50 employees who don’t currently offer health insurance coverage. According to the Kaiser Family Foundation, 98 percent of firms with 200 or more employees offer health coverage to employees; 94 percent of firms with 50 to 199 employees offer coverage.

Impact on Insurance Exchanges

Timothy J. Finnell, president of Group Benefits, LLC, told WK, “I would certainly think [the mandate delay] will affect the health insurance exchanges. In order to determine eligibility for subsidies, it is necessary to go to the Social Security Administration, the IRS, and U.S. Citizenship and Immigration Services, and the employer. [The government] wants to see how much money you make, verify your citizenship, eligibility for Medicaid and determine if you have affordable minimum value coverage from your employer.” If large employers aren’t reporting information regarding what sort of coverage they are offering their employees, Finnell said, “I don’t know how [the federal government] will be able to determine that.”

Employers

Finnell also said that “employers should view this as a reprieve, not a pardon. Don’t push it to the back burner and hope it goes away. It gives us more time to prepare. Employers need to continue to plan for it.”

Unanswered Questions

Some questions raised by the announcement remain, including:

  • What impact will this have on the individual mandate to have health insurance in 2014, which is still in effect (at least for now) if some currently uninsured people cannot get insurance in 2014 from their employer since the mandate has been delayed?
  • How will this play out in the 2014 midterm elections for Congress?
  • Does the Obama administration have the authority to bypass an act of Congress by issuing a statement on a Treasury Department blog, and will any group or individual sue the administration in an attempt to keep the mandate alive for 2014?

Regarding the last question, Rep. Phil Roe, M.D. (R-TN) has asked the Congressional Research Service to investigate whether the Obama administration has the authority to delay implementation of a statute passed by Congress.