Healthcare Reform School, Lesson #12: What does the Delay in the Employer Mandate Really Mean?

Welcome back to class.  Another scorching day here in Chicago, which I love.  This morning on my walk with my dog, I was thinking about the ramifications of the delay in the "Employer Mandate" in the Healthcare Law and what that means to people. I have been thinking and reading about this a lot in the past week.  Therefore the topic of this morning's blog was determined.  First I will explain exactly what the delay means in terms of the law, and then some general ramifications to people in general.

A big part of the Patient Protection and Affordable Care Act (PPACA) is that employers with more than 50 full time employees will be REQUIRED to provide QUALIFIED health insurance to employees at a reasonable cost.  If they do not provide good health insurance at a reasonable cost to employees, then they will be fined by the federal government approximately $2,000 per employee.  This is the part of the law that has been delayed by one year.  No other part of the law has been delayed.

Mark Mazur, Assistant Secretary for Tax Policy, wrote in a July 2nd, 2013 blog post.“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,”  “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.”

This was part of the announcement and the stated reason for the delay.  Businesses are complaining that the law is so ornerous in its reporting and it will be too difficult to get that part up and running by January of 2014.  No matter that this has been on the books since March 13, 2010.  In fairness to businesses, politicians have created doubt from the beginning about the efficacy of the law, and the details for the requirements have been long in coming.  Due to this lack of certainty, businesses took a wait and see attitude toward preparation.  After all, why should they spend money on something that might not happen, that takes away from profits.

So we know what this means to businesses.  They get a break for a year.  Most large corporations already provide qualified group plans, so no biggy for them and their employees.  It affects the smaller businesses and their employees and those few corporations that do not provide qualified health benefits.  A prime example is the McDonald's Franchise owner or similar type of operator.  Many of them do not provide health insurance to all employees. They are in the gray area of the law because they use many part time employees also, which makes requirements a bit more blurry.

All of this affects businesses in terms of what they are required to provide to employees, and in practice this affects those people that work for those businesses.  Now the catch here is that individuals are still mandated to get health insurance or face a penalty.  In the first year this penalty is minimal, $95 per year per person.  So many people will go without health insurance anyway and the penalty is not too bad, it is much less than actually buying the health insurance.

So for most people who do not get insurance through work now, that will not change in 2014.  Therefore the only option for compliance is to purchase their health insurance from a public Marketplace (online exchange) or a private Marketplace (similar to current methods of purchasing private insurance).  If they are eligible for a subsidy based on their income, then they will want to go to a public Marketplace.  If they do not qualify for a subsidy then a private Marketplace will be much easier and provide better doctors networks.

Courtesy of Simon Howden at freedigitalphotos.net

Note: The Federal Poverty Level (FPL) in 2013  is $11,490 for an individual and $23,550 for a family of four.  So if you make less than four times these totals as your Adjusted Gross Income, then you will qualify for some level of subsidy.  To figure out how much, use this subsidy calcultor.

The bottom line for the law is still this:  Everyone will be required to have health insurance and the insurance companies are required to insure everyone that applies, and the subsidies are designed to make it affordable to some. 

What changes for a year is that many people who were counting on employers to provide insurance will not get that option and many businesses will have one additional year to figure out how to deal with this extra government requirement and cost to their business.

If you would like my opinion on this, then write a comment.  I am trying to keep this blog objective and educational.  Opinions can skew the objectivity.  If you would like to check out the rest of my blog, check them out below

Lesson #1 - Introduction
Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
Lesson #3 - Public exchanges for Purchasing Insurance
Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
Lesson #5 - Tax Credits to Help Pay for Health Insurance
Lesson #6 - Enforcement and Penalties in the Affordable Care Act
Lesson #7 - Preparing for the Affordable Care Act
Lesson #8 -  Options for Small Businesses
Lesson # 9 - Will my Insurance Premiums change in 2014?
Lesson #10 - What Will Happen to Small Groups in 2014?
Lesson # 11 - Why Should I Buy Insurance Before the Deadline?