Health Care Reform Employer Mandate Delayed Until 2015

On July 2, the U.S. Treasury Department announced that the Obamacare employer mandate has been delayed by a year to 2015, which gives businesses some breathing room as they are now able to postpone offering worker health insurance for another year.

“I was somewhat surprised, but it clearly looked like we were heading toward what Sen. [May] Baucus called a train wreck,” said President of the National Business Group on Health Helen Darling. “When large employers institute any kind of change, even minor ones, they need at least a year’s lead time and sometimes two. We’ve been feeling a growing anxiety that this wasn’t going to happen. It’s an enormous relief.”

“The administration’s decision… to delay the implementation of the employer mandate is welcomed by the business community and will help avoid some serious near-term economic consequences of this law,” said U.S. Chamber of Commerce President and CEO Thomas Donohue in a statement.

The Affordable Care Act (ACA) passed in 2010, and was set to go into effect on January 1, 2014. It 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 the 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.

In a blog post, the Treasury Department explained that the government needs some time to simplify reporting obligations, and businesses need wiggle room to adapt to and implement the changes.

“There are a lot of steps to this. The law was passed in 2010, but the nuts and bolts of it have only come down in the past six to eight months,” said J.D. Piro, a senior vice president at Aon Hewitt in Lincolnshire, Illinos.

The possibility of corporations who wanted to avoid providing this medical insurance for their workers and who are on the verge of having 50 employees looking to temps and staffing agencies in order to evade being forced to obey the law or create more part-time jobs as another way to shirk the ACA’s policies was very likely and because of this, many investors bought temporary staffing stocks. The expectation was that the employer mandate would increase the demand for temporary staffing services, analysts with William Blair wrote in a report. However, because of the delay in the implementation of the employer mandate, investors may hold off on buying shares.

Though the delay will give employers some breathing room, they still need to figure out what to tell employees and what to report to the federal government, as well as figure out what health insurance they will offer employees by 2015.

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.

Despite the health care reform employer mandate delay, staffing agencies should still be prepared for an upturn in business in the next year or two. Although a bit later than originally predicted, all provisions of the Affordable Care Act will go into effect. The employer mandate is looming on the horizon, and it’s likely to still send business owners to staffing companies to fill their hiring needs.  Is your staffing company ready to weather the influx of business? There has never been a better time to learn about payroll financing. Payroll financing can get you the cash to fund payroll and other expenses during times of fast growth.