Tag Archives: Affordable Care Act

Another Delay for the Employer Mandate

pillsAnother day, another delay in implementing the Affordable Care Act (also known as Obamacare). Originally, the employer mandate — the part of the law requiring employers with at least 50 employees to provide affordable coverage to their full-time employees or pay a fine — was supposed to kick in weeks ago, at the beginning of 2014. Last year, the Obama administration delayed the mandate for a year, until the beginning of 2015.

This week’s further delay comes in two parts:

  • Mid-range employers (those with at least 50 but fewer than 100 employees) will have another year to provide coverage. For these employers, the mandate will now kick in on January 1, 2016.
  • Larger employers (those with at least 100 employees) won’t have to cover everyone right away. For 2015, these employers will have to offer coverage to only 70% of their full-time employees (Remember, “full-time” under the law means employees who work at least 30 hours a week.) For 2016, 95% of full-time employees will have to be offered coverage.

These delays (or “transition relief,” as a Treasury Department official described them in an article in the New York Times) appear in final regulations from the IRS interpreting the employer mandate portion of the law.

 

Lost in the Congressional Debate: The Self-Employed and Obamacare

pillsIn case you haven’t heard (!), many members of Congress seem to believe that every single member of “the American People” stands vehemently opposed to the Affordable Care Act. Various Republican politicians have compared Obamacare to a disaster, a train wreck, and yes, slavery. But here’s an interesting dilemma for the GOP: The group with whom the Republicans want to identify so often — entrepreneurs and independent business people — will benefit significantly from the law.

According to a study on the Affordable Care Act and entrepreneurship conducted by several nonpartisan groups (including the Center on Health Insurance Reforms), Obamacare is expected to swell the ranks of the unemployed. The study predicts that more than 1.5 million people will go into business for themselves as a result of the law, a more than 10% increase. Why? Because they will no longer be stuck in jobs they would prefer to leave just to get health insurance.

There are legitimate debates as to whether the coverage offered through the new health care exchanges is truly affordable, and even the law’s most fervent supporters agree that the initial rollout of the online marketplaces has been a parade of technical glitches. However, no one can dispute that Obamacare makes it possible for many people to purchase health care who were previously priced out of the market or couldn’t even find a plan that would take them at any cost. Those who stayed in unsatisfying jobs to keep their benefits (a phenomenon known as “job lock”) will now be free to move on, purchase their own benefits on the exchange, and take the plunge to start their own businesses.

Employers who are planning to cut back on employee benefits might also see a lesson here. For companies that are planning to cut employee hours to less than 30 (to avoid having to provide benefits under Obamacare) or otherwise try to get around the law, there may well be an initial cost savings. But these strategies will also remove one of the strongest incentives for employees to stay at their jobs. And, the employees most likely to leave and start their own businesses are often the very employees the company would most like to keep: the self-motivated, self-directed, business-minded cohort.