Obama Administration Announces Health Insurance Mandate Delay and Reduction of Percentage of Workers Covered Requirements

The Obama Administration announced changes in the implementation of the Affordable Care Act provisions related to the employer mandate for "medium-sized" businesses.  The provisions were originally drafted to go into effect this year. 

The changes in implementation deadlines do not affect most businesses. Companies with fewer than 50 workers remain exempt from the mandate. 

First, the deadline to meet the coverage requirements under the mandate for medium-sized businesses, companies that employ between 50 and 99 workers, has been delayed until January 1, 2016. The delay is conditional and requires companies to promise that the employer will neither cut an employees' hours nor let go of employees for the purpose of making their business qualify as a "medium-sized" business with 50-99 workers. Officials describe the verification process of this promise as "self-attestation" and the IRS has not provided information on how it will determine the companies' veracity. 

White House advisor Phil Schiliro explained the reasoning behind the change, "For the two-percent of American businesses that have between 50 and 99 employees, the Treasury Department concluded that a phase-in was the most common-sense way to implement the law." 

The employer provisions will go into effect for companies that do fall into categories covered by the employer mandate that do not have 50-99 workers. However, the requirement that the employers offer coverage to 95% of their full-time employees by January 1, 2015 has been reduced by 25%. The employers will now be required to offer coverage to 70% of their full-time employees by January 1, 2015. The Treasury Department's final rules state that the requirement for employers to offer coverage to 95% of their full-time employees has been delayed until 2016. 

Other changes affect seasonal workforces, adjunct faculty and volunteer firefighters and paramedics. Seasonal workers that work less than six months will not be considered full-time employees. The changes include a method for estimating the hours of adjunct faculty that accounts for hours spent working outside the classroom. The Administration's promise that volunteer firefighters and paramedics would not be considered full-time employees was formally implemented in the most recent changes. 

Many commentators are suggesting that the adjustments in implementation deadlines and requirements for businesses will increase pressure on the Obama Administration to extend deadlines for individuals so that they are not subject to the $95 or 1% of income fine for failing to purchase health insurance this year. Other experts counter that extending the deadline for individuals would result in fewer healthy individuals signing up now which could drastically shift the ratio of sick-to-healthy individuals enrolled. If too many individuals with significant health problems enroll without the balance of healthy individuals it could make the price of coverage more expensive.