Late Tuesday afternoon, July 2, 2013, the federal government issued a statement through the US Department of the Treasury, announcing that the controversial employer shared responsibility provisions, coined the ‘pay or play’ provisions of the Affordable Care Act (ACA) have been delayed for one year. This pushes the enforcement date of this provision from January 1, 2014 to January 1, 2015. This portion of the ACA requires employers with greater than fifty (50) employees to either provide health insurance that the employees can afford, or pay a penalty to the federal government for failing to do so.
The release from Mark Mazur, Assistant Secretary of the Treasury for Tax Policy, reads, in part, as follows:
The Administration is announcing that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.
Mr. Mazur goes on to state that within the next week, the Department of the Treasury will publish formal guidance regarding this change.
While every political commentator with a pulse has weighed in since this announcement, this provision is not as significant as it first seems. There are approximately 6 million employers in the United States. Of those, approximately 200,000 employ more than 50 individuals. Of that group, approximately 90% to 95% of them already offer health insurance to their employees. This requirement would affect none of these employers. Rather, only approximately 10,000 employers nationwide would have been impacted by the requirement to offer health insurance.
While the employer pay or play requirement is not insignificant, it does not affect nearly the numbers of individuals nationwide as other provisions of the ACA. Those other relevant portions of the ACA have not, at least as of yet, been delayed. For example, the provisions that create insurance exchanges in 2014, remain in effect and stand to influence the health care coverage and costs for millions of people. Also, the individual mandate remains untouched, and it also will impact millions of Americans. That said, yesterday’s announcement does raise some practical questions about how the government will enforce the individual mandate without any reporting mechanism for employers effective for 2014. Moreover, many commentators have questioned whether the state and regional insurance exchanges will be ready to begin operations as of January 1, 2014, as currently required by the ACA. It would not be surprising to see the government announce a similar one-year delay in implementation of the individual mandate and the insurance exchanges.
For more information about the announcement, please see the HR Defense Blog.