By Louise Radnofsky and Theo Francis
WASHINGTON D.C. -Most employers won’t face a fine next year if they fail to offer workers health insurance, the Obama administration said Monday, in the latest big delay of the health-law rollout.
The Treasury Department, in regulations outlining the Affordable Care Act, said employers with 50 to 99 full-time workers won’t have to comply with the law’s requirement to provide insurance or pay a fee until 2016. Companies with more workers could avoid some penalties in 2015 if they showed they were offering coverage to at least 70% of full-time workers.
The move came after employers pressured the Obama administration to peel back the law’s insurance requirements. Some firms had trimmed workers’ hours to below 30 hours a week to avoid paying a penalty if they didn’t offer insurance.
A senior administration official said the shift was a response to businesses’ concerns, though the official said no one reason was behind the change.
Under the original 2010 health law, employers with the equivalent of at least 50 full-time workers had to offer coverage or pay a penalty starting at $2,000 a worker beginning in 2014. Last year, the administration delayed the requirement for the first time by moving it to 2015.
The new rules for companies with 50 to 99 workers would cover about 2% of all U.S. businesses, which include 7% of workers, or 7.9 million people, according to 2011 Census figures compiled by the Small Business Administration. The rules for companies with 100 or more workers affect another 2% of businesses, which employ more than 74 million people.
Monday’s announcement of fresh changes comes as the administration weighs how much of the law to adjust in the wake of its troubled rollout. Health care is expected to be a central issue in the November midterm elections.
Many employers have been fierce critics of the law, and some praised the administration for giving them the flexibility they sought.
“I’m pretty pleasantly astounded by what I’ve seen on first read here,” said Neil Trautwein, a vice president and lobbyist with the National Retail Federation. “This is really the antithesis of the botched rollout of the exchanges, and I think they have tried mightily to smooth the impact of the penalty-mandate structure on the business community.”
GOP lawmakers, who oppose the law, seized on the delay to argue the administration should relax other key provisions, including the requirement that individuals carry coverage or pay a penalty, which has been in effect since the beginning of this year.
Senate Republican leader Mitch McConnell of Kentucky said, “It’s time to extend that exemption to families and individuals—not just businesses.”
The administration also signaled on Monday that big employers that currently offer coverage voluntarily will likely see simpler rules for how to prove that. Full regulations detailing the reporting requirements haven’t been released.
Most large employers offer coverage to their workers, though not all employees accept it, and some companies exclude blocs of workers. Many of the companies that don’t cover workers are lower-wage, smaller employers concentrated in the hospitality, retail and agriculture sectors. Some of them have begun trimming workers’ hours to reduce firms’ exposure to penalties.
Under the final rule released Monday, companies would be allowed to offer coverage to a subset of employees, such as those working 35 hours or more a week, during the phasing-in year.
The Obama administration has delayed requirements of the Affordable Care Act several times.
July 2013: Large firms with 50 or more full-time employees don’t have to offer health insurance or face fines until 2015, a delay of a year.
November: Insurance companies can continue selling policies that don’t meet the law’s requirements for at least a year.
November: Small business sign-up through HealthCare.gov is delayed for a year.
November-December: Consumer deadlines for January coverage on HealthCare.gov delayed from Dec. 15 to 23 and then to Dec. 24. Payment deadlines pushed into January.
Source: WSJ reporting
Senior Treasury officials said the shift was aimed at giving more time for smaller employers to adjust, and for all firms to consider the number of hours their employees worked and whether they should be cutting them. The officials said firms that wanted to use the new phase-in period would have to certify they hadn’t shrunk employee numbers in order to qualify.
The Treasury also set new rules for how the requirement would apply to workers such as volunteers and seasonal employees, saying that employers wouldn’t be penalized for failing to offer those people coverage, regardless of the number of hours they were working.
The new regulations are likely to help employers who currently don’t provide health coverage to certain employee groups by allowing them to temporarily continue that practice for at least some workers, said Paul Hamburger, a health-care attorney at Proskauer Rose in Washington.
But employers remain subject to a $3,000 penalty each time one of those workers buys coverage on a state health-care exchange and qualifies for subsidized premiums, he said, after a preliminary review of the new regulations.
The International Franchise Association, a trade group, said the move didn’t go far enough. “By picking winners and losers based on the size of a business, the administration has effectively placed another complicated hurdle on the backs of the small-business community in coming to terms with this law,” said the group’s president, Steve Caldeira.
The National Restaurant Association lauded the change. Eateries “certainly will appreciate the additional time,” said Michelle Neblett, director of labor and workforce policy for the group. She also praised particular provisions solidifying rules for determining which employees are full-time and how to measure whether coverage is considered affordable under the law.
The string of delays and changes to the law have reduced its initial impact and bolstered critics’ attacks on President Barack Obama’s signature domestic achievement.
The administration also asked insurers last year to temporarily reinstate policies that had been canceled because they didn’t meet new requirements set by the law. The administration had previously described those plans as inadequate.
The Congressional Budget Office recently revised slightly downward its estimate for the number of people who would use the exchanges this year to six million. Another eight million people would gain coverage this year by signing up for Medicaid, the CBO said.