The Obama administration has announced it is delaying until 2015 the requirement that businesses with more than 50 employees provide health insurance to their workers or pay a penalty.
The announcement by the Internal Revenue Service comes after numerous complaints from businesses that the requirements were too complicated and difficult to implement in time.
Business groups such as the National Retail Federation praised the delay, while congressional Republicans jumped on the move to reiterate their opposition to the 2010 health care law.
Other key parts of the law, including the health exchanges where individuals can buy insurance, are on schedule. The exchanges will open on Oct. 1, 2014, wrote Valerie Jarrett, a senior adviser to President Obama, in a White House blog update.
The delay also does not change the individual mandate, which requires most Americans to purchase insurance. Some consumers may receive subsidies to help them pay for the insurance depending on their incomes.
Jarrett said the move is a sign the White House is paying attention to the concerns of business. "As we make these changes, we believe we need to give employers more time to comply with the new rules." "Since employer responsibility payments can only be assessed based on this new reporting, payments won’t be collected for 2014."
Mark Mazur, assistant Treasury secretary for tax policy, in an IRS blog stated that, "We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so."
The delay gives the IRS more time to simplify reporting requirements, as well as for businesses to get up to speed with reporting systems. The government still encourages businesses to voluntarily begin reporting in 2014 so they will be ready for 2015.
Businesses with more than 50 employees would have paid a fee of $2,000 per uninsured employees after the first 30 employees. The Congressional Budget Office expected those penalties to bring in $4 billion in 2014.
This delay does not affect businesses with fewer than 50 workers, who were already exempt from that rule. Most large businesses already offer coverage to their employees.
Various parts of the law have taken effect since its passage in 2010, including allowing children up to age 26 to remain on their parents’ insurance plans and discounts for prescription drugs for Medicare patients. More young Americans have health insurance than before the law because of that change, and the discounts have saved Medicare recipients billions of dollars.
White House News Release July 2, 2013