White House delays ACA's employer-coverage mandate for one year

(Story updated with comment at 7:32 p.m. ET.)

The Obama administration is delaying for one year the employer mandate requiring companies to offer their employees health insurance.

Assistant Treasury Secretary for Tax Policy Mark Mazur posted a blog late Tuesday confirming that the 2014 mandate on employers with more than 51 full-time workers to offer qualifying health insurance coverage to their employees or face a penalty was being delayed until 2015.

The delay was meant to give time to simplify reporting requirements and to adapt health coverage and reporting systems, he wrote. It means that one of the key provisions of the Patient Protection and Affordable Care Act, which is unpopular among many business groups, will not take effect until after the 2014 congressional elections.

Bloomberg News reports that the White House plans to invite employer groups to discuss ways of easing administrative burdens created by the mandate.

Here's what Mazur's memo says the one-year delay will accomplish:

“First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees. Within the next week, we will publish formal guidance describing this transition. Just like the Administration's effort to turn the initial 21-page application for health insurance into a three-page application, we are working hard to adapt and to be flexible about reporting requirements as we implement the law.”

The memo continued: “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.”

Paul Fronstin, a senior research associate at the nonpartisan Employee Benefit Research Institute in Washington, D.C., doesn't see the delay as that big a deal. He says that's because more than 90% of employers with 51 or more employees already offer health benefits to full-time employees.

Fronstin adds the now-delayed mandate would have helped those employees working 30 to 40 hours a week who, thanks to ACA's definition of full-time employee, would have to be offered coverage by their employer.

Still, not all is lost for workers in that category. “If an employer is not (required) to offer affordable coverage, the employee can get subsidized coverage through the individual exchange,” Fronstin said.

The employer mandate angered many businesses groups who warned that employers would cut back many workers' hours to below 30 hours to avoid the mandate. For example, in November the owner of more than 40 Applebee's restaurant franchises said he would cut workers' hours to avoid having to comply.

Other businesses have taken the opposite approach. Cumberland Gulf Group, which operates convenience stores and gas stations, last month offered health benefits to those employees working between 30 and 40 hours, saying it is good for business and for employee retention.

The National Retail Federation praised the delay, with Vice President and Employee Benefits Policy Counsel Neil Trautwein saying in a prepared statement, “This one-year delay will provide employers and businesses more time to update their healthcare coverage without threat of arbitrary punishment. … We appreciate the administration's recognition of employer concerns and hope it will allow for greater flexibility in the future.”

Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, also voiced his approval, while lamenting that the individual mandate is still in place. “That the Obama administration is putting off this job-killing requirement on employers, but not individuals and families, shows how deeply flawed the president's signature domestic policy achievement is,” Hatch said.

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