(Adds White House comment in ninth paragraph.)
Feb. 11 (Bloomberg) -- Employers with fewer than 100 workers won’t have to provide health insurance until 2016 under Obamacare, as the administration said it would again delay a key requirement of the health law.
Larger firms have to cover at least 70 percent of the workforce starting next year, the Internal Revenue Service said in a rule issued yesterday.
The Patient Protection and Affordable Care Act envisioned as a cornerstone of its expansion of U.S. insurance coverage that employers with 50 or more workers would be required to provide health benefits to their employees. Under pressure from business groups, the Obama administration has weakened that requirement since July, first by delaying enforcement of the mandate until 2015. Many firms will have even more time under the new regulation.
“While about 96 percent of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate,” Assistant Secretary for Tax Policy Mark J. Mazur said in a statement. “Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees.”
The rule provides employers far more flexibility than allowed by the language of the health law, which levies fines of as much as $3,000 per worker against firms that don’t comply with the requirement.
Republicans have criticized President Barack Obama for appearing to unilaterally change the terms of the health-care overhaul for select groups, including employers and insurers. They have called on him to delay the law’s requirement that most individual Americans carry health insurance or pay a fine, which took effect Jan. 1. He has declined.
“Once again, the president is giving a break to corporations while individuals and families are still stuck under the mandates of his health care law,” House Speaker John Boehner, a Republican from Ohio, said in a statement. “And, once again, the president is rewriting law on a whim. If the administration doesn’t believe employers can manage the burden of the law, how can struggling families be expected to?”
The U.S. Treasury secretary has broad authority under the tax code to implement laws such as the health-care overhaul in ways that will encourage compliance, including by phasing in requirements, senior administration officials told reporters in a conference call.
Gene Sperling, director of the White House National Economic Council, said the decision to delay the mandate is an example of Obama “listening carefully to the needs and interests” of employers and small businesses.
“When you do things that are big and hard, they require more adjustments and transitions, considerations to make sure that they’re being implemented in as manageable a situation as possible,” he said today at a breakfast in Washington sponsored by the Christian Science Monitor. “The Republican criticism is that the president is taking into account the need to lessen disruptions to small businesses and employers. Do you have any question that if he had not made those adjustments that the criticism would be coming completely from the other direction?”
The Obama administration’s decision means many small businesses won’t have to worry about complying with the law’s employer mandate later this year when voters are going to the polls in congressional elections. Republicans are using the troubled rollout of the health law against Democratic candidates in the campaigns for the Nov. 4 election.
“Let’s just say the politics, the policy and the stars all aligned at a propitious time and have brought what appears, at least on the surface, to be a pretty darned good approach,” Neil Trautwein, a vice president at the National Retail Federation, said in a phone interview.
Trautwein’s group and other business organizations have lobbied the administration for further relief from the law’s coverage requirement. The degree of flexibility the government will allow surprised him, he said.
“I am pleasantly astounded,” he said. “In the context of the ACA, this is an extraordinarily pragmatic and wise approach to accommodate the law to the real world.”
Among other exemptions, the administration said in the rule issued today that employers won’t have to cover seasonal workers, those employed less than six months.
Employers with fewer than 100 workers will have to certify to the government that they haven’t fired workers to get under the threshold and qualify for the delay until 2016. They also must certify they won’t drop health plans they already offer, officials said.
The law, passed solely with Democratic votes by Congress in 2010, seeks to provide insurance for many of the nation’s 48 million people without health coverage. Among its major provisions, the law banned insurers from denying coverage to those with pre-existing medical conditions, allowed adults younger than 26 years old to remain on their parents’ health plans, expanded the Medicaid program for the poor and created insurance marketplaces for Americans to buy coverage with government subsidies.
About 3 million people signed up for private health plans using the new exchanges as of Jan. 24. An estimated 1.7 million more people have gained coverage from Medicaid through December, said Peter Gosselin, a Bloomberg Government senior health analyst.
--With assistance from Mike Dorning in Washington. Editors: Angela Zimm, Bruce Rule