Surprising both friends and foes of the health law, the Obama administration on Tuesday announced the delay of a key provision: the requirement that all but the smallest employers offer medical coverage or pay a fine.
Companies with at least 50 workers now have until 2015 to provide coverage if they don鈥檛 offer it already, giving them and Washington an extra year to work through the complex details of the legislation. The administration will deliver more guidance next week.
Meanwhile other parts of the law remain on track for implementation next year, according to officials. Here鈥檚 what the change means 鈥 and doesn鈥檛 mean 鈥 for workers and employers.
Q. The government has delayed the requirement for large employers to offer health plans. Am I still obligated to obtain coverage next year?
Yes. The requirement that individuals obtain health insurance or pay a penalty 鈥 which starts at $95 next year, or 1 percent of household income, whichever is higher, and rises to $695 or 2.5 percent of household income in 2016 鈥 has not changed. But for workers whose employers delay plans to offer coverage, buying a health plan in the subsidized marketplaces known as exchanges might actually be a better deal than what they would have been offered.
Q. My employer already has a health plan. Does this increase chances the company will drop coverage next year?
A. Probably not. The 聽even without a government requirement 鈥 to recruit and retain good, healthy workers, analysts say. The administration鈥檚 decision doesn鈥檛 change that.听
鈥淔or people whose employers already offer coverage, they鈥檙e doing it for a reason, and that reason still exists,鈥 said Paul Ginsburg, president of the Center for Studying Health System Change.
Q: If my employer already offers insurance, will this decision mean my coverage will be less generous in 2014?
That鈥檚 unlikely. The law requires all employer-sponsored insurance to cover at least 60 percent of medical costs. Coverage that costs more than 9.5 percent of household income is deemed to be unaffordable and those workers may qualify for premium subsidies on the online health marketplaces 鈥 putting the employer at risk of incurring a federal penalty.听In addition, employers that buy policies rather than self-insure .听
Sandy Ageloff, a benefits consultant with Towers Watson, says the administration鈥檚 announcement appears to lift the threat of financial penalties for companies that don鈥檛 meet these thresholds in 2014, though 鈥渢hose finer points will come out in next week鈥檚 guidance鈥 from the administration.听 It may be an academic point for most companies already offering insurance, because as Paul Fronstin of the Employee Benefit Research Institute notes, most existing employer policies already meet the law鈥檚 2014 requirements.
Q. What kinds of companies are likely to delay offering insurance to employees?
A. Large employers with lower-wage or variable-hour workers such as retailers, farms, food processors, restaurant chains, casinos and hotels are most likely to delay offering or upgrading coverage, analysts say.
But even well-paying companies such as Wall Street banks might employ uninsured call-center workers whose coverage could be delayed, said Steve Wojcik, vice president of public policy at the National Business Group on Health, an employer group.听
鈥淭his could be far-reaching into all kinds of companies that you might not think of,鈥 he said.
Q. What does the delay of the employer mandate mean for lower-wage workers?
A. Many low-wage workers already are employed by firms that don鈥檛 offer coverage, and, absent a mandate, that may not change next year, says Sabrina Corlette of the Center on Health Insurance Reforms at Georgetown University.听Workers who don鈥檛 get coverage through their jobs can enroll in an insurance plan through online marketplaces, or exchanges, set to open Oct. 1.
Uninsured people earning less than 400 percent of the federal poverty level, about $45,960 for an individual or $94,200 for a family of four, would be eligible for a sliding scale federal subsidy to help offset the premium cost.听
The lowest wage workers 鈥 those earning up to about 200 percent of the poverty level 鈥撀 may actually be better off if their employer does not offer coverage and they go onto the exchange.听That鈥檚 because the subsidies in that income range are larger, and coverage may actually be more affordable than that offered by an employer, particularly for family policies. Some of those workers may also qualify for Medicaid, particularly in the 23 states and the District of Columbia, which have expanded eligibility for the federal-state program. 鈥淭his is going to be a boon鈥 for some people, said Ginsburg.
Q. Will Tuesday鈥檚 announcement mean that more Americans will be eligible for subsidies to purchase coverage?
The Obama administration said its decisions won鈥檛 affect employees鈥 access to the premium tax credits. In fact, the delay in the employer mandate may result in more low-to-moderate income Americans seeking coverage 鈥 many of them eligible for federal assistance. So that could push up the amount the government is expected to pay out in premium and cost-sharing subsidies, which before Tuesday鈥檚 announcement was .
Tracking who is eligible for such tax credits or subsidies may be more complex.听 The subsidies are available only to people who meet the income requirements and don鈥檛 have job-based coverage that meets minimum affordability and adequacy requirements. With the one-year delay for employers to report such coverage, 鈥渋t would be impossible for Treasury to determine whether someone had access to affordable health insurance,鈥 said Joseph Antos at the American Enterprise Institute. Proposed rules, expected to be finalized soon, allow people applying for subsidies through the new market to simply attest that they don鈥檛 have access to job-based coverage, said Timothy Jost, a law professor at Washington and Lee University, in an analysis on the website of policy journal .
The Obama administration also hopes that employers will voluntarily provide the information, starting next year, , assistant secretary for tax policy at Treasury.
KHN reporters Julie Appleby, Mary Agnes Carey, Jay Hancock and Jordan Rau contributed.
