July 6, 2013
Obamacare Employer Mandate Postponed For One Year

The Obamacare employer mandate that was due to start on January 1, 2014, has been put on hold for one year.

Under the mandate in the Affordable Care Act, employers with 50 or more employees are required to provide government-approved health insurance to their workers or pay a $2,000 fine per employee.

The Obama Administration has now postponed that provision until 2015 "after hearing significant concerns from employers about the challenges of implementing it" although the individual mandate for Americans to buy health insurance or pay a penalty to the IRS will still go into effect as planned in 2014, the Washington Post reports.

The surprising delay on the employer end was announced on Tuesday on the US Treasury Department website. The Treasury announcement claims in part that this delay will enable the government to simplify reporting requirements for employers who already provide health insurance to their workers.

Many employers around the country have put their hiring plans on the back burner, or have decided to downgrade workers into part-time status, to avoid the Obamacare mandate entirely. Insurers have already warned of steep insurance premium increases flowing from Obamacare implementation. At least before this announcement, some employers reached the conclusion that it would be more cost effective to drop employee health coverage completely and instead just cough up the fines to the feds. Many of the so-called health exchanges designed to step in and provide coverage that are supposed to be up and running by October 1 are behind schedule.

Electoral politics may also have been a motivating force in delaying the enforcement of the employer mandate beyond the 2014 Congressional elections. As the Washington Examiner explains, "Politically, the decision smacks of the Obama administration wanting to defer the impact of the law on businesses during the 2014 midterm election year, avoiding headlines about businesses cutting staff levels or reducing worker hours to get around the mandate. But it could also be politically dangerous, by reinforcing the idea that the law is a looming train wreck. Republicans can now also run on an argument that if voters elect them, they’ll prevent this horrible policy -- so horrible that even the Obama administration had to delay it for a year -- from ever going into effect."

Another wild card is the authority (or lack thereof) of the Executive Branch of the government to unilaterally postpone one of the law's provisions; this question will likely wind up in court.

According to Forbes, even this temporary delay could have far-reaching consequences for the status of employer-provided health coverage generally moving forward: "Even if the Obama administration’s delay lasts for only one year, that delay will give firms time to restructure their businesses to avoid offering costly coverage, leading to an expansion of the individual insurance market and a shrinkage of the employer-sponsored market."

Are you surprised that large businesses and corporations are getting a break from the Obamacare mandate but not individual taxpayers?