White House Announces Another Delay of Employer Mandate
Responding to ongoing concerns from the business community about the burden on employers, the White House this week announced yet another partial delay of the Affordable Care Act’s requirement that most employers offer health insurance to their employees or face penalties.
The employer mandate, as it is known, applies only to large employers (those with more than 50 employees) and requires businesses to provide health insurance for full time workers (defined as those working more than 30 hours per week). Some businesses had objected to the 30-hour definition for full-time work, arguing that they needed extra time to comply. The employer mandate was originally slated to take effect in 2014, but last fall, the Obama Administration announced it was delaying implementation until 2015.
Now, that deadline has been pushed back again. In a final rule issued this week, the IRS announced it would delay the mandate until 2016 for mid-sized employers, those with 50-99 employees. It also announced a partial delay for employers with 100 or more employees. These large employers may now phase in their health coverage, beginning with covering 70% of full-time employees in 2015 and ramping up to 95% in “2016 and beyond.” Large employers that fail to meet these requirements will be subject to the tax penalties in 2015, while mid-size employers will be subject to the penalties starting in 2016.
The Obama Administration noted that the phase-in of large employer requirements will help employers that, for example, may offer coverage to employees with 35 or more hours, but not yet to that fraction of their employees who work 30 to 34 hours. Meanwhile, opponents of the Affordable Care Act criticized the President for granting more leeway to businesses than to individuals, who must comply with the law’s individual mandate in 2014 or face a penalty.
To learn more about the new regulation and find out how it affects your business, visit the IRS “Questions and Answers” website. You can also view a simple flowchart of the law’s tax penalties from Kaiser Family Foundation.