In an announcement that seemed to take everyone by surprise, the Obama administration yesterday issued a statement that it would not enforce the employer mandate of Obamacare until 2015. More specifically, the statement indicates that the Obama administration won’t enforce the law’s reporting requirements for employers or assess the “shared responsibility” payments (fines for failing to provide adequate, affordable healthcare) until 2015. These provisions were supposed to take effect at the beginning of 2014.
This change was billed as the administration’s effort to “listen to the business community.” However, the effects of the change could be much more widespread. The deadline for the individual mandate has not changed; we all still have to have insurance coverage by January 1, 2014, or pay a penalty. I will refrain from detailing my thoughts about the administration giving a break to the “business community” while the actual humans are still on the hook. But postponing the employer mandate will make the individual mandate more challenging. For example, whether subsidies are available to employed people who buy their own insurance depends on the quality and cost of insurance available to them at work. If employers aren’t required to report on that, how is the IRS going to know who is eligible for a subsidy?
Postponing the employer mandate and reporting requirements also, frankly, gives employers more time to come up with ways to get around the law by restructuring their workforces (look for more job openings for employees to work no more than 29 hours per week), coming up with ways to offer the least coverage possible and pay the lowest penalties (like this scheme, which came to light only a few weeks ago), and so on.
Here’s an additional complication: The administration doesn’t seem to have the authority to require this delay. As noted in this article in Forbes, the effective date of the mandate is statutory. Congress said, right there in the law, that it applies to “months beginning after December 31, 2013.” Although the administration could choose not to enforce this part (as they did with DOMA before the Supreme Court overturned it), they might face a lawsuit over their decision. And, unlike the DOMA situation, there will be real people who are harmed by this delay.