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One Year Delay in Enforcement of Affordable Care Act Mandate

Jul 12 | 2013  by

On July 2, 2013, the Obama Administration announced a delayed implementation of a key Affordable Care Act provision.

Affordable Care Act Mandate

The mandate requires employers with 50 or more workers to provide affordable health coverage to employees. Otherwise, they’ll risk tax penalties of up to $2,000 for each full-time employee that did not get health coverage. The Affordable Care Act mandate was originally to take effect on January 1, 2014, but now will not be implemented until January 1, 2015.

The employer mandate has been a big source of anxiety and criticism in the business community as many business owners feel that the provision would be too costly to implement. Additionally,  confusion remains on which businesses would be subject to the mandate as definitions of “full-time” employees and what constitutes “affordable” insurance are complicated and subject to interpretation.

The delay in implementation of the employer mandate does not affect the other implementation timelines of the Affordable Care Act, including the opening of the health care exchanges in October 2013 and new tax credits to help individuals buy health insurance.

Rand Corporation Study

A Rand Corporation study on the impacts of delaying the Affordable Care Act’s mandate. Some of the key findings were incredible:

  • Effect on Insurance Coverage
    • Only 300,000 fewer people, or 0.2% of the population, will have access to affordable insurance in 2014 because of the delay.
    • About 1,000 fewer firms, or 0.02%, will offer coverage in 2014 given the delay.
  • Affect on Firms and Employes
    • Only 0.4% of firms, employing 1.6% of workers, will pay a penalty for not offering health insurance.
    • Only 1.1% of firms will pay a penalty for offering unaffordable coverage to less than 1% of the workforce.
  • Less Revenue to Offset Costs of ACA
    • A delay will cost $11 billion dollars less in revenue for the government. Including:
      • $7 billion less in penalties on firms that do not offer insurance, and
      • $4 billion less from fines of employers that offer unaffordable care.
    • A full repeal of the Affordable Care Act employer mandate would result in the loss of approximately $149 billion in federal revenue over the next ten years.

Obviously, the impacts of this delay sound detrimental. However, only time will tell in the long run. It will be interesting to see its full impact.