News Column

Obamacare Penalty Delayed for Large Businesses

July 3, 2013

The Obama administration has announced a one-year delay on penalties against large employers who fail to offer workers insurance coverage under the Affordable Care Act.

Although the administration said the decision was the result of "careful, thoughtful" consideration, opponents of the federal health-care law said it reflects general disarray in the program.

"We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," Mark J. Mazur, assistant treasury secretary for tax policy, wrote in a blog posted on the department's website Tuesday.

"We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action."

In response to the announcement, U.S. Rep. Jim Bridenstine, a Republican representing Oklahoma's 1st District, tweeted "Yet another admission by Dems that Obamacare is unworkable."

The tax penalties of $2,000 per uninsured employee after the first 30 employees are now set to go into effect Jan. 1, 2015.

The penalties apply only to businesses with more than 50 workers that fail to offer employees qualifying coverage. They are triggered when an employee obtains a federal subsidy for coverage through an Affordable Care Act health insurance exchange.

The tax penalties are a central element of Oklahoma's lawsuit against IRS rules to implement the Affordable Care Act.

Oklahoma's suit argues that because the state isn't building an exchange, no subsidies can be distributed here and therefore no penalties can be levied.

The penalties are also a key issue in Oklahoma City-based Hobby Lobby's suit against birth-control mandates in the federal law.

The delay is designed to meet two goals, Mazur said.

"First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law," he wrote. "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."

After talking to stakeholders, the administration plans to issue new rules to cover the penalties this summer, Mazur said.

"Once these rules have been issued, the administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015," he said. "Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015."

The decision will not affect the ability of eligible people to obtain subsidies through a health insurance exchange, Mazur said. Exchanges for every state are due to start enrolling clients Oct. 1 for coverage to begin Jan. 1.

In Oklahoma, anyone earning between 100 percent and 400 percent of the federal poverty level will be eligible for health insurance premium subsidies through a federally built exchange. The size of an individual's subsidy will be determined on a sliding scale, taking several variables, including income and family size, into account.

"During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage," Mazur wrote. "Also, our actions today do not affect employees' access to the premium tax credits available under the ACA (nor any other provision of the ACA).

Mazur's statement is titled "Continuing to Implement the ACA in a Careful, Thoughtful Manner," but opponents of the plan blasted Tuesday's announcement as a continuing sign of troubles with the health-care program.

"Today's announcement by this administration does not lessen the overall blow of Obamacare," said U.S. Rep. Markwayne Mullin, R-Okla. "As a country we cannot continue to ignore Obamacare's impact on jobs and small businesses. The fact is, this health care mandate is unworkable and unsustainable."

The 2nd District congressman said the federal health-care law will still wreak havoc on the economy and stifle job growth.

"All Americans and business owners deserve reform that protects their jobs, lowers their costs and improves their quality of life. Obama-care does not do that," Mullin said. "We must work to put America back in business."

Gwendolyn Caldwell, senior vice president of government affairs for the State Chamber of Oklahoma, said the decision underscores the uncertainty of the health-care landscape.

"Nothing keeps a business owner up at night more than uncertainty," Caldwell said. "While we are pleased the assessment of penalties has been delayed, this decision only means the rules have once again changed for Oklahoma businesses who have been trying to understand the complicated federal Affordable Care Act.

"How are business owners going to invest in new infrastructure or create jobs or raise wages with the continuance of uncertainty coming out of D.C.? The answer simply is they won't," she said.

"Despite opposition to the law, many employers have already invested significant time and money to be prepared for compliance. The federal government owes these businesses clear expectations and certainty so they can plan for their future accordingly."

Source: (c)2013 Tulsa World (Tulsa, Okla.). Distributed by MCT Information Services.

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