Obamacare’s insurance mandate on employers will quietly take effect for large companies Thursday, one year later than planned after a pair of unilateral delays fed into Republican claims the White House plays fast and loose with the implementation of its signature law.
Starting in 2015, companies with 100 or more workers have to provide affordable insurance to at least 70 percent of their employees or pay heavy fines under the “employer mandate,” which was supposed to take effect at the start of this year, alongside the health care law’s other key provisions.
Employers with 50-100 workers will have to comply starting in 2016, at which point all affected employers must insure at least 95 percent of their employees.
Employers with fewer than 50 workers are exempt from the mandate.
The first days of implementation should pass without much notice.
“For most large companies, it’s not going to be a major problem,” said Caroline Pearson, a vice president at Avalere Health, a Washington-based consultancy, who noted most companies with more than 100 workers offer compliant insurance.
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But human resources departments will grapple with IRS reporting requirements from day one to document their compliance and avoid tax penalties, a task that can get Byzantine and expensive for companies with lots of part-time workers and seasonal workers, who add up to full-time “equivalents.”
The employer mandate has been a political football since the health care law passed in 2010, as critics say employers have stopped hiring or cut hours to stay under the mandate’s thresholds.
The White House delayed the mandate twice, moves that Republicans lambasted as political ploys to delay enforcement until after the midterm elections.
The issue will be thrust back into the public eye in the coming weeks, when congressional Republicans taking control of both chambers try to force changes to the rule.
GOP lawmakers say leadership will hold votes to change the mandate’s definition of full-time work from 30 hours to 40 hours, as even some Democrats fear the nontraditional definition is hurting the workforce.
Republican lawmakers have coined a phrase, “the 29ers,” to describe people whose hours were cut because they were suddenly considered full-time workers eligible for health insurance.
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Rep. Michael Burgess, Texas Republican, told The Washington Times in mid-December that the vote would raise awareness among any employees who do not realize they are subject to IRS reporting requirements under the mandate.
Ms. Pearson said the shift from 30 hours to 40 hours should not be a major problem for companies, which would “happily adjust” their reporting.
But Congress’ budget scorekeepers have estimated the move would raise deficits by $73 billion over 10 years, as the government would collect fewer penalty payments.
Employers who flout the mandate by offering no coverage must pay a fine of $2,000 per employee if at least one worker takes advantage of a tax credit on the Obamacare insurance exchanges. In calculating the fine, companies can subtract 80 workers in 2015 and 30 workers in 2016.
Companies that offer coverage that is not deemed adequate under the law can pay the lesser of the $2,000-per-employee fine or $3,000 for each employee who seeks subsidized coverage from Obamacare.