The Obama administration has postponed one of the fundamental provisions of the health-care reform law, responding to mounting concerns from business owners who would have been required to start providing health coverage to their employees next year.
On Tuesday evening, Treasury Department officials announced the government would not penalize businesses that fail to provide health insurance next year, delaying what is known as the “employer mandate” component of the law until 2015. Starting then, firms with more than 50 employees will be required to provide at least a minimum level coverage to their workers or pay a steep fine to the federal government.
Officials made the decision to push the requirement back after fielding a flood of complaints from business owners about its implementation.
“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark Mazur, assistant secretary for tax policy, wrote in a blog post announcing the postponement, later adding that the administration plans to use the additional time to “consider ways to simplify the new reporting requirements” for business owners.
The newly delayed mandate has been a major point of contention for small business owners and lobbyists since it was approved as part of the Affordable Care Act in 2010. Many warned that it would cause administrative nightmares for small employers and discourage those near the cutline from expanding beyond 50 workers.
Meanwhile, some firms have started scaling back their payrolls to get underneath the cap.
“Small companies have told us they are confused by the law and are simply finding it difficult to comply with, no matter when it goes into effect,” Rep. Sam Graves, chairman of the House Small Business Committee, said in an email to The Washington Post. “Instead of providing relief for businesses, this simply kicks the can down the road.”
A White House official said the added time would help small business owners adapt to the changes, arguing that the law will still drive down prices for coverage on Main Street.
“This allows employers the time to . . . make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers,” Valerie Jarrett, an adviser to Obama, wrote in a blog post on Tuesday.
This latest delay is the most consequential in a series of setbacks for the president’s signature law, which has shown signs of fragility as the initial deadline for full implementation approaches at the end of the year.
In April, the administration announced it would delay for one year a key cost-cutting feature of the law’s new small business health insurance marketplaces. Initially, the exchanges were supposed to allow employers to choose different plans for different workers; now, for the first year, they must select only one plan from a single carrier for their entire business.
More recently, the Government Accountability Office announced that federal and state officials have fallen well behind schedule setting up the marketplaces, which are scheduled to open for enrollment in October.
“This is simply the latest evidence that implementation of this terrible law is going to be difficult if not impossible, and the burden is going to fall on the people who create American jobs,” Amanda Austin, director of federal public policy at the National Federation of Independent Business, said in a statement.
The NFIB, a small business lobbying group, has pushed back against the health care law since it was making its way through Congress, later spearheading an effort to repeal the legislation that ended at the hands of the Supreme Court. The group has since focused on repealing some of the provisions it considers most detrimental to businesses on Main Street, including the employer mandate and a new tax on insurers.
Instead of delayed, Austin argued the mandate should be eliminated altogether.
“Temporary relief is small consolation,” she said. “We need a permanent fix to this provision to provide long term relief for small employers.”