The Obama administration’s announcement about the employer-mandate delay pushes one wave of bad news past the 2014 elections. It may be just a coincidence that the announcement is being made now, after the president met privately with Democratic members of Congress last week at their retreat. He no doubt got an earful about how frightened they are about facing the voters while trying to defend the unpopular law.
Today’s announcement may provide a measure of relief, because it allows employers with 100 or fewer workers not to provide health insurance next year (the law also exempts all businesses with under 50 workers).
The delay of course does not change the individual mandate, which requires most Americans to purchase insurance. But that shoe may be dropping next, probably as soon as the open-enrollment period in exchanges is completed on March 31 (unless that is extended, too).
Businesses with 50 or more employees have been distraught over the requirement that they provide health insurance or pay fines of $2,000 to $3,000 for every worker for not complying with the law.
The first 30 workers were exempt, but that means that a restaurant with 50 employees would have been subject to at least $40,000 in fines a year if it couldn’t afford to provide health insurance (50 employees – 30 exempt = 20 who are subject to the penalty; that * $2,000 each = $40,000).
Many small employers say that just the fines would have more than consumed their profit margins. But if employers put workers on part time – meaning fewer than 30 hours a week – they can avoid the penalties. That means there would have been a new barrage of new stories with workers having their hours cut and jobs eliminated in the run-up to the 2014 elections.
The ACA calls for the employer mandate to take effect on January 1 of 2014, and the administration has no legal authority to delay it. However, on July 2, 2013, the administration announced in a blog post that the reporting requirements for the mandate were being delayed from 2014 to 2015. This new announcement essentially delays it until 2016.
Today’s announcement from the Treasury Department, which is charged with enforcing the employer mandate, further slices and dices the employer community, providing other targeted exemptions for seasonal employees who work fewer than six months a year, students working under federal or state-sponsored work-study programs, and some adjunct faculty members.
This delay is a tacit admission by the administration of the damage and distortions the law is causing in the employer community. The only solution to the law’s problems, of course, is permanent relief, through repeal.