You have probably heard the news by now that the Obama administration announced that it is delaying enforcement of one piece of the Patient Protection and Affordable Care Act (PPACA) for one year. The starting date for the mandate that employers with 50 or more full-time equivalent employees have to offer affordable health insurance to their employees beginning January 1, 2014 or face penalties of $2000-$3000 per employee has been delayed until January 1, 2015. This is a huge relief to many businesses, particularly restaurants, hotels, retail establishments and construction companies, who have not traditionally provided health insurance to all of their employees and were scrambling to try to figure out their strategy for complying with the law without the cost of the benefits putting them out of business. Employers still have to make those tough decisions, but will not do so in as big a rush as they were facing and hopefully will have more guidance in making those decisions.
However, every employer needs to understand that this delay in the pay or play penalties for employers and the reporting by employers of the details of the health coverage that they offer does not mean that many other parts of the PPACA aren’t going to be effective on January 1, 2014. For example, the individual mandate, requiring that every American have health insurance, has not been delayed. This means that every citizen has to have coverage in 2014, but many will not have any insurance offered through their employers on that date. Fortunately, the IRS penalty for a person who doesn’t have health insurance is only $95 for 2014 and won’t increase until after that.
PPACA provisions that are not going to be affected by the delay and will therefore need to be addressed in 2014 by employers who already provide health insurance include the 90-day limit on waiting period for benefits eligibility, the maximum deductibles of $2000 single/$4000 family on new plans and renewals, the “community ratings” guidelines, which require premiums not to be based on health status, but on age, geography and tobacco use (which will benefit older, sicker groups and hurt younger, healthier groups), the elimination of pre-existing conditions exclusions, the requirement to provide at no additional cost certain preventive care (including contraception), the summary of benefits and coverage disclosure rules that dictate how health plan benefits information has to be presented to participants, and the taxes on employers, including the $63/person fee for every participant in a health plan, the $2/person PCORI fee to fund research, and the premium tax of 2.54% for participants of fully-insured medical plans.
For those employers who do not provide health insurance yet to the majority of your workforce, you can take this time to shop around for better rates, to better structure your workforce as full-time or part-time, to set up better time-keeping systems to know how many hours each employee works each week, and to better train your human resources and benefits staff. However, you must understand that this delay should in no way stop your efforts to get ready for compliance with PPACA. It is breathing room, a break, but the work still needs to be done.