Obamacare employer mandate changes mostly are timing
The latest twist in what has become Obamacare's employer mandate saga should have companies with 50 or more employees smiling — but not too widely, advisers say.
That's because the added time the new rules allow some businesses is counterbalanced against the fact that the mandate is still largely unchanged. And, of course, change itself is a complicating factor in an already famously complex law.
"It's just a frustrating process when the rules keep changing," says Robert Glus, a partner at Susquehanna Township-based Conrad Siegel Actuaries. Although it pushes back some timelines, he says, by and large he doesn't expect the new rules to ultimately change what employers are going to do.
Also, the rules still don't tell employers exactly what information they'll have to report; the administration has been saying that will be forthcoming soon ever since the first time it delayed the employer mandate. A U.S. Treasury Department fact sheet on the latest change says Treasury and the IRS "will issue final regulations shortly that aim to substantially simplify and streamline the employer reporting requirements."
But beyond the headline-grabbing delay, "there are a lot of little changes, almost all of which are good news for employers," says Eric Athey, an attorney who co-chairs the labor and employment division of Harrisburg-based McNees Wallace & Nurick LLC.
Like many insurers, Pittsburgh-based Highmark Inc. has been offering a health care reform calculator to help businesses assess their positions and make decisions. Because of the new rules, spokesman Leilyn Perri says, "We will make minor changes to adjust the penalty calculations relevant to the market."
The big delay is for businesses with 50 to 99 employees, which now have until 2016 before the mandate, aka pay-or-play, requires that they provide qualifying coverage to all full-time-equivalent employees or pay penalties. FTE is most simply described as 30 hours a week.
For businesses with fewer than 50 FTE employees, nothing changes. They have never been subject to the employer mandate.
For businesses with 100 or more employees, the mandate begins in 2015. The delay is in the $2,000-per-employee penalty (minus the first 30) for not offering all FTE employees adequate health insurance; in 2015 they only have to offer it to 70 percent of their employees, and in 2016 the requirement rises to 95 percent.
That delay may sound impressive, but Glus says it's not that big a deal, because many of those large employers already offer their full-time employees coverage, and it's pretty easy to satisfy the requirement.
"All you have to do is offer coverage to your employees," he says. "You can offer them coverage, but it could be at 100 percent of the cost of the plan."
It's the second part of the penalty where things get trickier, he says; that's on the $3,000 penalty for not offering affordable coverage. That will be assessed on companies for every FTE employee who goes to the Obamacare marketplace and obtains an individual plan with a subsidy — and it's starting for the large employers in 2015.
The last big delay in the new employer mandate rules is much simpler to explain: A business has until the beginning of its fiscal year to comply, instead of having to comply by Jan. 1.
On the education front, Athey says colleges and universities have been pressing for clarification on how to classify adjunct faculty members. They will likely be happy with the administration's decision that each hour of teaching or classroom time be counted as 2¼ hours of service for mandate purposes.
On another issue, educators get special treatment but likely not in a way they will appreciate. Athey says the initial regulatory proposals said employees who didn't work for 26 weeks could be treated as new hires and required to requalify for benefits. In the new final rule, he says, that has been trimmed to 13 weeks for all employers except school organizations.
"It's pretty clear, I think, that the National Education Association has their hands on this one," he says.
Other clarifications came on issues ranging from who does and does not qualify as a dependent to accounting for hours airline crews spend on layover and how long an employer has to keep offering health coverage to a formerly FTE employee who voluntarily decides to cut back to part-time hours. The rules also codify an earlier IRS announcement that volunteer firefighters will not be considered employees for purposes of the mandate.
Despite all the changes, the advisers say their message to companies remains the same: Get good advice on these important, complicated decisions, and plan ahead.