WASHINGTON - The Obama administration is delaying enforcement of another provision of the new health-care law, one that prohibits employers from providing better health benefits to top executives than to other employees.
Tax officials said they would not enforce the provision this year because they had yet to issue regulations for employers to follow.
The health-care law, adopted nearly four years ago, says employer-sponsored health plans must not discriminate “in favor of highly compensated individuals” with respect to either eligibility or benefits. The government provides a substantial tax break for employer-sponsored insurance, and as a matter of equity and fairness, lawmakers said employers should not provide more generous coverage to a select group of high-paidemployees.
But translating that goal into reality has proved difficult.
Officials at the Internal Revenue Service said they were wrestling with complicated questions like how to measure the value of employee health benefits, how to define “highly compensated” and what exactly constitutes discrimination.
Bruce Friedland, a spokesman for the IRS, said employers would not have to comply until the agency issued regulations or other guidance.
President Barack Obama signed the health-care law in March 2010. The ban on discriminatory health benefits was supposed to take effect six months later. Administration officials said then that they needed more time to develop rules and that the rules would be issued well before this month, when other major provisions of the law took effect.
“Under the Affordable Care Act, for the first time, all group health plans will be prohibited from offering coverage only to their highest-paid employees,” said Erin Donar, a Treasury spokesman. “The Departments of Health and Human Services,Labor and the Treasury are working on rules that will implement this requirement.”
Some health insurance arrangements will almost surely be forbidden, officials said. For example, they said, employers will not be able to provide coverage only to management.
Likewise, the officials said, a company could not provide free coverage to “highly compensated individuals” while requiring other employees to pay, for example, 25 percent of the cost. In addition, they said, benefits available to the dependents of highly paid executives must be available on the same terms to dependents of other employees in the health plan.
The enforcement delay is another in a series of deadline extensions, transition rules and policy shifts for the new health-care law.
In recent months, the administration has delayed a requirement that larger employers offer coverage to fulltime employees and delayed online enrollment in the federal insurance exchange for small businesses.
It waived major provisions of the 2010 health law so consumers could renew policies that would otherwise have been canceled or terminated because they did not meet the law’s coverage requirements.
In addition, federal officials announced that people with canceled insurance policies could obtain hardship exemptions sparing them from tax penalties if they went without insurance this year.
Front Section, Pages 11 on 01/19/2014