Treasury Delays ACA Employer Reporting & Penalities

The Treasury Department announced late yesterday afternoon that they will delay the “Pay or Play” requirements for employers with 50 or more full-time equivalent employees. This groundbreaking change in D.C. in an early indicator that Obamacare may ,in fact, be crumbling. Employers with more than 50 employees were scheduled to be penalized a $2,000 fine for each full-time equivalent employee beginning on January 1st, if they don’t provide health insurance for their employees. This fine was a key component in financing the new bill. Without the fine, it begs the question: Will the current administration have enough money to cover the millions of Americans who will enroll in the plan of their choice on January 1st? Do the fines imposed upon insurers increase dramatically in 2015? Unitedhealthcare announced yesterday they are leaving the individual health insurance market in California. What happens to reimbursements to providers? Currently, providers are paid the same reimbursement in Obamacare that they currently enjoy in the private market. Will the current administration look to cut reimbursements to make up for the loss of revenue with respect to employer fines? What will be the reaction from employers who are essentially kicking the can down the road for just one year? Do employers continue to make big changes and move employees to the newly formed Exchanges?

We have spent the last six months educating employers who are affected by the “Pay or Play” mandate and many have lowered the number of hours for current employees to get below the 50 employee threshold, have held out hiring new employees, and are prepared to make dramatic changes to their healthcare plans if they currently have a plan. While the Treasury ruling does give them a breather, the Individual Mandate was not affected by yesterday’s historic ruling, nor is the creation of the new Healthcare Exchanges that the insurance industry and the states have been working diligently to create.

Until further notice, all U.S. citizens will be required to enroll in either their employer’s healthcare plan, their spouses’ employers healthcare plan, enroll in the newly created Healthcare Exchange, with or without a government subsidy, or pay a fine and continue to be uninsured. Until further notice, states and the insurance industry are frantically racing for the October 1st deadline in which Americans can enroll in the newly formed Healthcare Exchanges.

The announcement does give medium sized employers a chance to hit the pause button and let Obamacare play out over the next twelve months and allow the employer to develop a strategy for 2015. It also gives the affected employer a free pass on any fines next year if the employer decides getting out of the healthcare business and moving all employees to the new Marketplace. Our recommendations on making sure you count all of your full-time equivalents, understand potential penalties for 2015, and the importance of conducting a subsidy analysis for your employees is still a priority in the 4th quarter of 2013.

As your ACA expert, we will keep you posted on future changes. It looks as if the wheels of Obamacare are starting to lose significant tread.


Burman S. Clark

Burman S. Clark, RHU, CSA is the President of Muneris Benefits and a licensed insurance broker and consultant. His independent practice and focuses on employee benefits, individual life, disability, medical, and senior products. Burman has traveled extensively and provided guidance to large employer associations with regards to the Affordable Care Act.