U.S. to further delay Obamacare employer mandate

WASHINGTON — The Obama administration again delayed a requirement that large employers provide their workers with health benefits, offering businesses more relief from the president’s health law deadlines.

Under the law, employers with more than 50 full-time employees must offer affordable health benefits or pay fines, a requirement originally scheduled to go into effect this year but postponed until 2015.

Now, under Monday’s action, the employer mandate will be phased in and won’t fully take effect until 2016. The additional delay is likely to have little effect on employees because the vast majority of large employers already offer health benefits.

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The phase-in plan drew praise from several leading business groups that have worried about complying with the complicated documentation required by the law.

But the move marks a further retreat in the rollout of the Affordable Care Act at a time when the White House hopes to convince a skeptical public ahead of this fall’s congressional elections that the law works.

Republicans are seeking to make Obamacare, as the law is commonly known, the top issue in races Democrats must win to hold the Senate. The law’s opponents, who oppose the employer mandate, almost immediately characterized the decision as more evidence that the healthcare overhaul is a “disaster,” as Sen. Orrin G. Hatch (R-Utah) put it.

The delay also fueled new speculation that the employer mandate might eventually be scrapped because it is cumbersome and may not be necessary to prompt employers to provide coverage.

The administration has not delayed the penalty on individuals who do not get health coverage this year.

Most health experts believe the individual mandate is much more central to the law. It is designed to create a pool of insured Americans large enough and healthy enough to support the system of guaranteeing coverage even to people with pre-existing medical conditions.

Administration officials said the phase-in period would give businesses more time to adapt to the new requirement in the 2010 law.

“We will continue to make the compliance process simpler and easier to navigate,” said Mark J. Mazur, the assistant Treasury secretary for tax policy.

Under the latest regulations, only employers with more than 100 full-time workers will have to pay fines next year and only if they do not cover at least 70% of those workers.

In 2016, when the full mandate takes effect, employers with more than 50 full-time employees will have to provide insurance to at least 95% of their employees.

The employer mandate is designed to prevent businesses from dropping health benefits, especially with the government now providing subsidies to help low- and moderate-income Americans buy coverage in the new online marketplaces.

The law’s authors worried that companies would be tempted to stop offering coverage, shifting the cost to taxpayers.

Large employers that do not provide insurance are supposed to pay a fine — called an employer responsibility payment — of $2,000 per employee above the first 30 employees.

Employers may be subject to even higher fines if their employees cannot afford the coverage offered at work and then qualify for government subsidies to buy coverage on their own.

“Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees,” Mazur said.

Just 2% of employers fall into the transitional category of businesses that have 51 to 100 employees, and another 2% have more than 100 employees, according to the administration. Companies with more than 100 employees employ 66% of U.S. workers; those with 51 to 100 employ 7% of workers.

Small businesses continue to be exempt from any requirement that they provide benefits.

The employer mandate has never been popular with businesses, particularly because of the complex reporting requirements necessary to enforce the mandate.

The new regulations provide clearer direction on several gray areas.

Among other things, they clarify that volunteers will not be counted as full-time employees, thereby sparing volunteer fire companies and others from having to pay fines if they do not offer benefits.

The rules also indicate that teachers and school employees will be considered full time, even if their schools are closed over the summer.

Neil Trautwein, vice president of the National Retail Federation, was among several business leaders who welcomed the new accommodations.

“We are quite pleased with the additional transitional relief,” he said, noting that administration officials had “secured the gold medal for greatest assistance to retailers and other businesses and our employees.”

Christine Pollack, vice president of the Retail Industry Leaders Assn., another leading trade group, said: “Retailers appreciate the flexibility in the final rules which provide a road map for implementation and will help them prepare for the changes in the way they can provide coverage to their employees and their families.”

But if the Obama administration mollified business leaders, it did little to quell political opposition. Republicans on Capitol Hill renewed their attacks on the law.

“Once again, the president is rewriting law on a whim,” House Speaker John A. Boehner (R-Ohio) said. “This continued manipulation by the president breeds confusion and erodes Americans’ confidence in him and his healthcare law. We need fairness for all, with relief from Obamacare for every American.”

Administration officials said the law allows the administration to make such adjustments.

“The secretary has very broad authority to implement the tax law in a way that benefits tax administration,” said a senior Treasury Department official who was not authorized to speak on the record. “We think the phase-in approach really is a way to administer the law better and enhance overall compliance.”

nlevey@tribune.com