Health-care reprieve set for employers

Businesses that don’t cover workers won’t face ’14 fine

Former President George W. Bush and President Barack Obama observe a moment of silence Tuesday during a wreath-laying ceremony for the victims of the 1998 embassy bombing in Dar es Salaam, Tanzania. Obama left Africa for home soon after as administration officials announced a delay in parts of Obama’s health-care initiative.

Former President George W. Bush and President Barack Obama observe a moment of silence Tuesday during a wreath-laying ceremony for the victims of the 1998 embassy bombing in Dar es Salaam, Tanzania. Obama left Africa for home soon after as administration officials announced a delay in parts of Obama’s health-care initiative.

Wednesday, July 3, 2013

Businesses that do not provide health insurance coverage to their workers won’t face a penalty next year as called for under the 2010 federal health-care overhaul law, a U.S. Treasury Department official announced Tuesday.

Instead, President Barack Obama’s administration will delay enforcement of the requirement to offer coverage, which applies to businesses with 50 or more employees, until 2015.

In a post on the Treasury Department’s blog, Assistant Treasury Secretary Mark Manzur said the administration is delaying the requirement to allow time for the department to simplify and test its requirements for businesses to report information about employees’ coverage.

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Manzur wrote.

On the White House blog, senior Obama adviser Valerie Jarrett also cited the need to simplify business-reporting requirements.

“Just like our effort to turn the 21-page application for health insurance into a 3-page application, we are working hard to adapt and to be flexible in employer and insurer reporting as we implement the law,” Jarrett wrote.

Randy Zook, president and chief executive of the Arkansas State Chamber of Commerce, called the delay a “good, smart step.”

“I think you’ve got to give them credit, frankly, that they’ve heard the outcry of frustration from so many business owners and managers,” Zook said.

Starting in 2015 under the new timeline,the “shared responsibility” provision of the Patient Protection and Affordable Care Act will affect businesses that don’t offer coverage and have at least one employee who enrolls in subsidized coverage through one of the health-insurance exchanges being set up in every state.

Those businesses will face a fine of $2,000 per employee, subtracting the first 30 employees from the calculation. For instance, a business with 60 employees would pay a $60,000 fine if even one worker receives a subsidy.

Also delayed are penalties for companies that offer coverage that is not considered affordable and that have an employee who receives coverage through an exchange. Starting in 2015, those companies will pay the lesser of two possible penalties: $2,000 per employee, again subtracting the first30 employees from the calculation, or $3,000 per employee who receives a subsidy.

The coverage is considered unaffordable if an employee would have to spend more than 9.5 percent of his income on the premiums.

In Arkansas, the owners of some businesses that offer coverage and employ low-wage workers have been considering increasing the amount they contribute toward the premiums so that the coverage would meet the affordability test.

Since late last year, the Harrison-based Northwest Arkansas Area Agency on Aging, which employs about 500 part-time workers who help elderly people with daily tasks in nine counties, has been reducing some employees’ hours to make sure they don’t work more than 30 hours per week - the threshold that triggers the requirement to offer coverage.

The delay doesn’t affect a requirement - upheld by the U.S. Supreme Court last year - for people to obtain coverage starting next year.

Those who fail to do so will face a penalty of $95 or 1 percent of their income, whichever is greater. The penalties do not apply to those who would have to pay more than 8 percent of their incomes to obtain coverage from their employers or through the insurance exchanges.

The delay also won’t affect a tax credit available to businesses with fewer than 25 employees and that pay average wages of less than $50,000 a year. Those businesses can claim a credit for up to half of their premium expenses if they help their employees buy coverage through one of the health-insurance exchanges being set up for small businesses.

In Arkansas, the potential penalties to businesses were lessened by the Legislature’s decision in April to expand eligibility for Medicaid, through private insurance plans offered on the exchange, to about 250,000 adults earning incomes of up to 138 percent of the poverty level - $15,860 for an individual or $32,500 for a family of four.

A company will not be penalized for having an employee who receives coverage through Medicaid.

The penalties are triggered, however, if employees receive tax credit subsidies, which are available to those who don’t qualify for Medicaid and have incomes of up to 400 percent of the poverty level.

That threshold is $45,960 for an individual or $94,200 for a family of four.

Arkansas Surgeon General Joe Thompson said Tuesday that the delay of the employer penalty provision won’t have much effect on the more than 500,000 Arkansans who lack insurance.

Most large employers already offer coverage, he noted. And employees who lack insurance will still be able to get coverage through the state’s exchange.

Enrollment on the exchange will start Oct. 1 for coverage that begins Jan. 1.

“The employers get a pass on the penalty for a year, but it’s a relatively small number of employers,” Thompson said.

Cynthia Crone, the deputy insurance commissioner in charge of planning the exchanges in Arkansas, offered a similar assessment, saying the penalties would have only affected about 1 percent of the state’s employers.

“My first blush is that it will not have much of an impact on Arkansas’ market,” she said.

Thompson added that the delay could be a wise decision.

“We need to get this right, and if they weren’t going to get it right, I’d rather delay it for a year and get it right,” he said.

Front Section, Pages 1 on 07/03/2013