Small and midsize businesses stand to benefit the most from the latest delay in the health law’s employer insurance requirement. The Obama administration delayed that requirement until 2016 for companies with 50 to 99 full-time workers.
A New Your proprietor of a produce and grain farm last year rearranged her employees’ schedules and workloads to keep the farm’s full-time staff below 50 workers. Her goal was to avoid having to start providing insurance or pay a penalty in 2015 under the Affordable Care Act.
Ms. Pedersen, who owns Pedersen Farms with her husband Rick Pedersen, said she doesn’t plan to hire more workers since it would create an administrative burden for eventually complying with the law. “We’re going to continue to stay under the 50 people,” she said.
President Barack Obama on Tuesday said the administration adjusted the employer insurance requirement to ensure midsize companies had time to comply with it.
“We want to make sure that the purpose of the law is not to punish them, it’s simply to make sure that they are either providing health insurance to their [employees] or that they’re helping to bear the cost of their employees getting health insurance,” he said.
Health-benefits experts said the change will help small and midsize companies by giving them more time to research coverage options and costs. But several small businesses said Tuesday that the extra time offered only minimal relief.
“All it’s doing is delaying the ultimate for another 12 months,” said Tim Copeland, co-owner of Copeland Furniture Inc., a manufacturer in Bradford, Vt., with 95 employees.
Though his company offers insurance coverage to its full-time staff, he said he would consider dropping the benefit if the penalty were to be substantially less and if the Vermont exchange could provide his employees with comparable coverage. He is hopeful that won’t be necessary. But premiums for his business, a maker of residential hardwood furniture since 1977, rose by about 5% last year, and in 2012 premiums jumped 30%, he said.
Originally the 2010 health law called for employers with the equivalent of at least 50 full-time workers to offer coverage or pay a penalty starting at $2,000 a worker in 2014. The administration delayed the requirement last year for the first time by moving it to 2015.
David Moyal, owner of a commercial printing company in New York, cheered the delay. “It’s great news,” said the entrepreneur, whose 70-employee company, 1800postcards.com Inc., offers a health plan but doesn’t contribute any money toward premiums. “We’ve been hiring a lot of people lately, so this is amazing.”
Mr. Moyal said his 22-year-old business, with $11 million in annual revenue, can’t afford the cost of health insurance. He’s now hoping the law’s employer mandate will be delayed again in two years or even canceled. Otherwise, he said, he would probably pay the penalty because he believes it would be more affordable for his business.
When asked whether the delay could be extended, a Treasury spokeswoman pointed to the fact sheet from the news release. The fact sheet issued Monday from the Treasury Department stated: “As these limited transition rules take effect, we will consider whether it is necessary to further extend any of them beyond 2015.”
In addition to the full reprieve for smaller companies, the administration also said Monday that larger companies could avoid some penalties in 2015 if they showed they were offering coverage to at least 70% of full-time workers.
Some 91% of employers with 50 to 199 workers already offer health benefits to their employees, according to a 2013 study from the Kaiser Family Foundation.
Paul Fronstin, director of health research for the Employee Benefit Research Institute in Washington, D.C., said small employers can use the extension to talk to workers about whether they would prefer a plan with high premiums and low deductibles or the opposite. “An employer should be collecting as much intelligence as they can,” he said, because this will help in estimating future health-care costs.
OperationsInc LLC, a human-resources outsourcing firm in Norwalk, Conn., has more than 800 clients, most with between 30 and 75 employees. While all offer employee health insurance, David Lewis, president of the firm, said about 25% wouldn’t be in compliance with the employer mandate if it were in effect today, either because they don’t offer enough coverage or they don’t contribute enough toward premiums. He’s telling clients to sit tight after the latest regulatory change “because we expect things will change yet again,” he said.
*Modified from a WSJ.com article