WASHINGTON — The Obama administration is giving larger employers another year to comply with the Patient Protection and Affordable Care Act (ACA) mandate that they provide health insurance coverage for their workers or pay a penalty.
The White House and the Treasury Department announced the plan Tuesday evening, saying the delay comes in response to complaints by businesses that they didn’t have enough time to meet the complex requirements of the health care reform law.
With the change, mandatory employer and insurer reporting requirements under the ACA won’t begin until Jan. 1, 2015, rather than in 2014 as initially called for under the law.
"This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees," Mark Mazur, assistant secretary for tax policy at the Treasury Department, wrote in a July 2 blog posting on the department’s website.
Plans call for the administration to publish formal guidance on the transition within the next week and proposed rules this summer. The ACA includes information reporting by insurers, self-insuring employers and other parties that provide health coverage and requires information reporting by certain employers regarding health coverage offered to full-time workers.
Mazur stated that after the issuance of the rules, the administration will "strongly encourage" employers and insurers to voluntarily implement the information reporting in 2014 and test their reporting systems to prepare for the full application of the provisions in 2015.
"We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so," he wrote.
The ACA requires businesses with more than 50 employees to provide health coverage or face fines. Companies with fewer than 50 workers gain access to the Small Business Health Options Program for assistance in helping workers get coverage.
Valerie Jarrett, a senior adviser to President Barack Obama, said in a July 2 White House Blog post that the changes will cut red tape and facilitate reporting.
"We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination," Jarrett wrote. "So we plan to revamp and simplify the reporting process. Some of this detailed reporting may be unnecessary for businesses that more than meet the minimum standards in the law. We will convene employers, insurers and experts to propose a smarter system and, in the interim, suspend reporting for 2014."
In addition, the administration plans to postpone employer shared responsibility payments until 2015. Originally, those payments were due to apply next year.
"We believe we need to give employers more time to comply with the new rules," Jarrett explained. "Since employer responsibility payments can only be assessed based on this new reporting, payments won’t be collected for 2014. This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers."
The decision to delay the employer provisions of the ACA was applauded by the National Retail Federation (NRF), which said the move showed the administration’s "recognition of employer concerns."
"We commend the administration’s wise move to delay the employer reporting and penalty obligations under the Affordable Care Act," Neil Trautwein, vice president and employee benefits policy counsel for the NRF, said in a statement. "This one-year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment."
The Retail Industry Leaders Association (RILA) said that its member companies and Employers for Flexibility in Health Care (E-Flex) coalition have been "extremely vocal" in expressing concern to the administration about the lack of time for employers to comply with the ACA requirements. Last fall, RILA president Sandy Kennedy urged President Obama to provide employers with transition relief under the law, the association noted.
"Today’s announcement is very welcome news to all employers who continue to offer quality health care and to the employees that benefit from it," RILA vice president Christine Pollack said in a statement Tuesday. "Employer-sponsored coverage is the backbone of health coverage in the U.S, which is why for more than a year retailers have warned that the lack of time to comply with ACA requirements could jeopardize coverage for millions of Americans."
Under the ACA, plans call for state health insurance exchanges — where uninsured and underinsured Americans can shop for coverage — to go into effect on Oct. 1, and most Americans will be required to have health insurance by Jan. 1 or face tax penalties.
The administration’s announcement on Tuesday didn’t mention any potential changes to the insurance mandate requirement or deadline.
It’s estimated that starting in 2014, more than 30 million Americans previously lacking health insurance will be able to buy health plans through the insurance exchanges or get coverage via broader Medicaid eligibility under the ACA.
For drug chains, this will mean a stream of new customers coming into their stores for prescriptions and health services, as well as walking through the aisles of products in the front end to get to the pharmacy.
National health care spending is projected to rise nearly 4% in 2013 before a sharper increase of over 7% in 2014, according to the Centers for Medicare & Medicaid Services. Prescription drug sales, which account for three-quarters of retail medical product sales, are forecast by CMS to experience a similar growth trend, edging up just over 2% in 2013 before jumping almost 9% in 2014 and then averaging more than 6% through the end of the decade.
