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Another delay in health law’s employer requirement

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February 11, 2014 | 2 Comments

WASHINGTON — Angling to avoid political peril, the Obama administration Monday granted employers another delay in a heavily criticized requirement that medium-to-larger firms cover their workers or face fines.

In one of several concessions in a complex Treasury Department regulation of more than 200 pages, the administration said companies with 50 to 99 employees will have an additional year to comply with the coverage requirement, until Jan. 1, 2016.

For businesses with 100 or more employees the requirement will still take effect in 2015. But other newly announced provisions, affecting technical issues such as the calculation of working hours, may help some of those firms.

More than 90 percent of companies with 50 or more employees already cover their workers without the government telling them to do so, but the debate has revolved around the potential impact on new and growing firms. Most small businesses have fewer than 50 workers and are exempt from the mandate. However, employer groups were also uneasy with a requirement that defines a full-time worker as someone averaging 30 hours a week.

Republicans trying to take control of the Senate in the November elections have once again made President Barack Obama’s health care law their top issue, casting it as job killer. They want to use the employer mandate to build that case, with anecdotes of bosses reluctant to hire a 50th worker, or slashing the hours of low-wage workers who need to pay household bills. Monday’s moves by the administration seemed calibrated to reduce that risk.

The reaction of business groups was mixed.

“These final regulations secured the gold medal for greatest assistance to retailers, and other businesses, and our employees,” said Neil Trautwein, a vice president of the National Retail Federation.

The U.S. Chamber of Commerce was unimpressed, calling it more of a respite than a fundamental change.

“This short-term fix also creates new problems for companies by moving the goalposts of the mandate modestly when what we really need is a time-out,” president Thomas Donohue said in a statement.

The administration still hasn’t issued rules for reporting requirements on business and insurers, the nitty-gritty of how the coverage requirement will be enforced.

Administration officials and the law’s supporters said the concessions were the sorts of reasonable accommodations that regulators make all the time when implementing major new legislation. The Treasury department said Secretary Jack Lew was well within his legal authority in making the changes.

“This common sense approach will protect employers already providing quality insurance, while helping to ensure that larger employers are prepared to meet their responsibility to their hard-working employees,” said House Minority Leader Nancy Pelosi, D-Calif.

But Republicans said they smelled fear.

“It is clear Democrats don’t think they can survive politically if Obamacare is allowed to fully go into effect,” said Rep. Dave Camp, R-Mich., who as chairman of the Ways and Means Committee oversees the tax penalties enforcing the mandate.

The law passed in 2010 required employers with more than 50 employees working 30 or more hours a week to offer them suitable health coverage or pay a fine. The coverage requirement was originally supposed to have taken effect this year.

But last summer the the administration announced a one-year delay, the first sign of potential problems with the rollout of the health care law.

Since then it’s been a gigantic crisis management drill. The new online signup system at HealthCare.gov was crippled by technical problems for the better part of two months last fall. Separately, millions of people who were already buying health insurance individually had those policies cancelled because the plans did not meet the law’s requirements.

With the online system mostly fixed, supporters of the law are hoping to turn around public opinion.

When it comes to the impact on jobs, “the big concerns that have been raised by opponents of the Affordable Care Act amount to very little because large employers already think it is in their best interest to provide coverage to their workers,” said Ron Pollack, executive director of Families USA, a liberal advocacy group.

In other provisions announced Monday, the administration said:

— Companies will not face fines if they offer coverage to 70 percent of their full-time employees in 2015, although they will have to ramp that up to 95 percent by 2016. The law defines “full time” as people working an average of 30 hours a week per month. That concession is expected to help firms who have a lot of workers averaging right around 30 hours.

— Volunteer firefighters and others who give of their time will not be considered employees for under the law. Some volunteer fire departments worried they might have to shut down if forced to provide health insurance.

— Adjunct faculty members at colleges will be deemed to have worked 2 hours and 15 minutes for each hour of classroom time they are assigned to teach. Officials said that means someone teaching 15 hours a week in the classroom would be considered “full time” and eligible for coverage, but someone teaching 12 hours may be considered part-time.

— A one-year delay in a requirement that employers offer coverage to dependents of full-time workers. Companies that are working to meet the goal will have until 2016 to comply.

The Associated Press

The Associated Press

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Discussion | 2 comments

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  • Mr. PracticalFebruary 11, 2014 - 6:54 am

    The real killer that Pelosi and others aren't mentioning is the requirement in the Employer Mandate that the employee's contribution to their health care plan can't be more than 9.5 percent of their income. I spoke with a business owner yesterday that has several casual, full service breakfast restaurants with a total of 120 employees. Most employees are at or near minimum wage except for a handful of managers. Servers earn about $12 an hour after tips. They currently provide healthcare and pay for half. For illustration purposes, I'll use $12 an hour as the average wage even though some non tipped employees (bus boys, dishwashers, etc...) earn less. Assuming an average health insurance premium of $500 a month (conservative), the employers contribution is currently $250 per month. Under the mandate and the 9.5 contribution rule, the employer's contribution would go up by $59 per month, to $309. Multiply that by 120 employees and it's $7,080 a month out of the business owners pocket. Restaurants operate on very thin margins and revenues have been down during the recession. The key to profitability is controlling labor and food costs. Many of these business owners are not taking home a check now. They are trying to survive until the economy improves. In California, Steinberg and Leno have submitted another minimum wage bill (SB935) that would increase the minimum wage to $11 next year, to $12 in 2016 and $13 in 2017. Then, starting in 2018 it would be indexed for inflation each year. Let's look at the impact on this same business owner. In 2017, the increase over the current $8 MW is $5 per hour. That results in an increase payroll of $168 per month, per employee. Multiply that times 120 employees and the additional labor cost would be $20,160 per month. Reduce that by 30 percent since payroll is deductible and the net cost is $14,112 per month. Add that to the $7,080 per month loss due to the Obamacare Employer Mandate, and those two laws alone (and there are many other threats out there - Google "AB 1164" Liens") cost this employer $21,192 per month. This would certainly threaten the viability of this business. If this were all to happen in this economy, the business would be toast. There goes 120 jobs.

    Reply | Report abusive comment
  • Russell V KinzFebruary 11, 2014 - 9:24 am

    Why is the govt in the health buisness anyway. This is tax payer $ they are throwing around. Oh, and Nancy dear, why are you exempt from this boondoggle? Oh yeah, the ruling class

    Reply | Report abusive comment
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