*By Patrick J. Hoban
The Obama administration announced yesterday that it will delay enforcement of the Patient Protection and Affordable Care Act’s (“PPACA”) employer mandate by one year, until January 1, 2015. Under the employer mandate, large employers (those with 50 or more full-time employees) must either offer employees and their dependents affordable group health insurance coverage that provides minimum value or pay a penalty between $2,000 and $3,000 per full-time employee.
The administration’s delay does not affect the establishment of healthcare exchanges, which must begin running by October 1 of this year. As a result, it is expected that small employers will still be able to offer healthcare to their employees through the healthcare exchanges. Additionally, the delay in enforcement of the employer mandate will not affect the so-called “individual mandate” (which requires that individuals will obtain health insurance or pay a “tax”).
In delaying enforcement of the employer mandate, the Treasury Department cited the concerns of large employers about the implementation and complexity of complying with PPACA’s requirements. The Treasury Department has stated it will release proposed regulations within the next week. It is also likely that the delay in enforcing the employer mandate was designed to allow the government some breathing space to establish and begin operating the health insurance exchanges. Health insurance exchanges play a critical role in determining whether a large employer is subject to a fine and there is some doubt as to whether such exchanges will be operational as scheduled on October 1, 2013.
For now, large employers have an additional year to comply with PPACA’s health care coverage requirements. Employers should utilize this additional time to the fullest extent possible, carefully analyzing all options to ensure full compliance with PPACA once the employer mandate does take effect in 2015. As it has since 2009, Z&R will continue to track PPACA and notify you of significant developments.
*Patrick J. Hoban has tracked PPACA’s effect on employers since the legislation was introduced in 2009 and has advised employers on strategies for complying with its various employer-specific provisions. For more information about PPACA and its potential effect on your operations, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
