It was recently announced that one of the biggest parts of health care reform, the employer mandate, has been delayed by a year to 2015. This enables businesses to postpone offering worker health insurance for another year.
The Affordable Care Act passed in 2010, required businesses with over 50 full time workers to offer affordable healthcare to them. The ACA demanded employer coverage just for those who work over 30 hours per week for a period of a month. Depending on the size of your company and the state in which it’s located, a business may be able to buy a less expensive small group policy through a standardized insurance exchange. If a company has fewer than 25 employees but they choose to offer insurance anyway, the ACA will provide a tax credit to balance the price. Smaller companies also have more incentive to self-insure, in which the businesses take on the financial risk of offering health benefits to its workers. Rather than paying premiums to insurers, they pay claims filed by workers and health care suppliers. Larger corporations with hundreds of employees or more often self-insure as well because they have the cash on hand to pay the majority of the claims filed right away.
However, the U.S. Treasury Department recently explained in a blog post that the government needs some time to simplify reporting obligations, and businesses need wiggle room to adapt to and implement the changes.
While many worried that Obamacare would hurt small businesses, the truth is that of all the businesses in the U.S., 97% are too small to be affected by the law. And most big employers were already providing insurance for their employees so the law will really only oblige a little over 1% of businesses to start offering insurance coverage.
The main reason behind the healthcare law is to provide for the country’s workers. The latest Census data showed that close to 80 million people work for companies that must provide insurance and while most already do, there are still millions who will have to wait another year to be offered employer-covered health insurance.
According to the Treasury, the latest change won’t affect the individual mandate which demands most taxpayers buy insurance or pay a government fine. The timeline hasn’t changed for the application of the individual and small businesses exchanges – which are marketplaces where people and business owners can shop for insurance at the state level.