Here are some questions and answers about the impact of the delay announced Tuesday for the employer-mandate portion of the Affordable Care Act (ACA). The law had required companies with 50 or more employees to provide affordable health coverage for their workers as of Jan. 1, 2014.
Q. How does Tuesday's announcement affect the number of people who gain coverage under the law?
A. It shouldn't have a big impact. Congressional Budget Office forecasts show that most of the people who gain coverage are expected to do so either through an expansion of the state-federal Medicaid program that begins next year or by buying a policy through new health insurance exchanges slated to start operating this fall. Starting Oct. 1, consumers will be able to access these new online marketplaces to shop for private insurance plans and use income-based subsidies to help pay the bill.
The employer mandate mainly serves as a way to dissuade large employers from dumping their workers on the exchanges, where federal money might be used to help them buy coverage, Citi analyst Gary Taylor said, adding that it has little to do with the expansion of coverage. Plus the mandate is not removed. It's just delayed a year.
Q. How does Tuesday's decision affect big companies or large employers?
A. Under the health law, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance. That's what is delayed until 2015.
Most medium-size and large businesses already offer health insurance. Ninety-eight percent of all companies with at least 200 workers provided health benefits to their employees last year, according to a survey done by the Kaiser Family Foundation and Health Research & Educational Trust. Ninety-four percent of companies with 50 to 199 employees provided health benefits. The mandate was expected to have the biggest consequences for major chain hotels, restaurants and retail stores that employ many low-wage workers. Some had threatened to cut workers' hours, and others said they were putting off hiring, so those plans may be delayed.
Q. What should business owners do in the next year?
A. They need to educate themselves and be prepared by the summer of 2014 to start deciding on their strategy. The majority of companies make decisions on health care in the fourth quarter because policies go into effect Jan. 1. They shouldn't put health care on the back burner for another year. Among the issues is how much coverage to offer, keeping in mind that if it's not considered affordable under the ACA's standards, owners will have to pay a $3,000 fine per employee. Some may decide it's cheaper to pay the government than to spend on insurance.
Q. What about companies with fewer than 50 workers?
A. These companies aren't required to provide health insurance, so the delay doesn't affect them. But some do provide coverage, and many others that don't are interested in buying insurance. So they're likely to look at the price of plans when the exchanges are set up later this year.