Employer Mandate Delayed by Obama Administration

Published July 29, 2013

The Obama administration has announced a unilateral one-year delay in reporting requirements for insurers and employers under Obamacare. As a result of that delay, the employer mandate to provide insurance is effectively delayed until 2015.

The announcement came in a Treasury Department blog post from Mark J. Mazur, Assistant Secretary for Tax Policy.

The delay is intended to allow the administration time to simplify the complex reporting requirements decreed by the law and to give employers additional time to comply with the coverage mandates and reporting the insurance status of their workers. The administration will try to use the additional time to streamline the reporting to make it feasible for employers to comply.

“Once these rules have been issued,” wrote Mazur, “the Administration will work with employers, insurers, and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.”

Accelerating Dumping

Manhattan Institute Senior Fellow Avik Roy predicted the move would “send more employees to the health insurance exchanges.”

“In the short term, the delay will have several effects. The mandate drives up the cost of labor, and therefore increases unemployment; delaying the mandate by one year may modestly mitigate that disincentive,” Roy said. “Most importantly, the delay of the mandate means that more people will want to enroll in Obamacare’s subsidized insurance exchanges. Every year, fewer and fewer employers offer health coverage; given one more year to restructure their workforces, this process could accelerate.”

According to Roy, President Obama’s law has had significant ramifications on hiring decisions. A recent poll from CNBC found 41 percent of those surveyed had suspended hiring because of Obamacare.

Questions of Legality

Ryan Ellis, tax policy director for Americans for Tax Reform, said the government was ignoring the text of the law in delaying the mandate until after the election.

“They are giving themselves transition relief the statute doesn’t empower them to have,” Ellis said.

Galen Institute president Grace-Marie Turner agrees.

“It is astonishing,” said Turner, “that the administration thinks delaying the reporting requirements and fines for the employer mandate will provide relief. Apart from the fact that administration officials do not have the authority to change the statute, do they really think that employers will suddenly start hiring people for a year, only to have to lay them off next year? “

No Change to Subsidies

Mazur’s statement maintained the delay in the employer mandate would have no effect on the availability of taxpayer subsidies for the purchase of insurance.

“During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage,” Mazur wrote. “Also, our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA).​”

Under one such provision that will remain in effect, employers who provide insurance for their employees must cover preventive services. The administration has ruled that includes contraceptive drugs and devices, some kinds of which violate the religious beliefs of some employers. That provision will still be in effect, so companies like Hobby Lobby, Inc., will still be under the threat of being fined $100 per day per employee.

“Employers are going to continue to restructure their businesses to avoid pulling the 50-employee trigger. And it isn’t the reporting requirements that are the primary concern of employers,” said Turner. “It’s the cost of the ObamaCare health insurance and fines.”

Turner said this is a sign President Obama and his allies dramatically underestimated the impact of his law.

“This is further evidence that the administration just doesn’t understand the fundamental reasons for the devastating damage this health law is doing to the economy,” said Turner.

Internet Resources:

Treasury Notes: Continuing to Implement the ACA in a Careful, Thoughtful Manner, by Mark J. Mazur