Pause—because that’s what the government just did. The Obama administration has delayed the “employer mandate” component of the Affordable Care Act for one year, which means employers have one more year until they are required to provide health insurance to their employees.
The 2,000-plus page document, with all its components and provisions and mandates, is nothing but daunting, and health care reform has been a whirlwind of confusion for business owners. So small-business expert Rieva Lesonsky is here to answer questions about the reform, its delay and what it means for small businesses.
SUCCESS: There has been a lot of confusion surrounding health care reform's "employer mandate" component. What is it and how does its delay affect small businesses?
Lesonsky: First the good news. The so-called “employer mandate” provision of the Affordable Care Act does not affect most small businesses at all. Only businesses with 50 or more employees are affected by the employer mandate. Most small businesses have less than 20 employees.
The intention of the employer mandate is to make sure midsized and large companies provide health care insurance to their employees—and impose penalties on companies that don’t. More than 90 percent of companies with 50 or more employees already offer health insurance, but the administration didn’t want these businesses to stop providing insurance and move their employees to the government subsidized health insurance "exchanges," as they're called.
For the overwhelming majority of small businesses the delay will not affect them at all.
SUCCESS: Does the employer mandate delay affect any other elements of the health care reform package, including the consumer mandate for individuals?
Lesonsky: The delay doesn’t really impact any other part of the Affordable Care Act. Part of the purpose of the employer mandate is to generate funds (mainly from penalties) to help pay for other aspects of the law. This will delay those revenues, but most experts don’t think that will matter much, either in the short term or long term.
SUCCESS: What are the perks to the mandate delay?
Lesonsky: The positive aspect for larger employers is they are NOT required to offer health care to their employees. But since most do anyway, the biggest perk is they have more time to implement the mandate and the reporting procedures that come with it. Some business lobbying groups hope to take advantage of the delay in hopes they can change some provisions of the law, increasing the number of hours part-time workers have to work to be eligible. (I believe it’s 30 hours under current law.)
SUCCESS: What are the downsides to the delay?
Lesonsky: For employers, there really aren’t any downsides. For employees who work for companies that don’t offer health care, they will have to get coverage from the individual mandate.
SUCCESS: As a small-business expert, what are the key financial decisions small-business owners should focus on in the upcoming year when preparing for the mandate?
Lesonsky: Since this only applies to larger companies, one could argue that growing businesses will put off hiring that employee No. 50, since that’s when the mandate kicks in. That would hurt the economic recovery. Health insurance coverage is considered a major perk by American workers. Companies that don’t offer coverage have a much harder time retaining staff (which ultimately is quite costly).