Note: This is Part 1 in a series on the Affordable Care Act. Part 2 can be read here.
The Obama administration announced in July that businesses would have an extra year to fulfill the employer mandate of the Affordable Care Act. That means companies with 50 or more employees now must meet a Jan. 1, 2015 deadline to offer affordable health insurance, or pay a penalty.
“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” wrote Mark Mazur, an assistant secretary at the treasury department, in a blog post announcing the delay. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so.”
The announcement came as a surprise to some small businesses, but for many it only added to confusion about their obligations under the ACA.
“Many employers have mistakenly interpreted the employer mandate reporting delay to mean that the ACA itself is delayed for a year,” says Matt Thomas, president of WorkSmart Systems, which provides human resource services to about 300 small and medium-sized businesses in 37 states.
Only the “pay or play” provision is affected, Thomas says, and even that affects only a small percentage of small businesses. According to a the latest annual survey by the Kaiser Family Foundation and Health Research & Educational Trust, 91 percent of firms with 50 to 199 employees already offer group health plans.
According to the law, here’s what employers still must do by January 1, 2014:
- Make sure their health plans are compliant with the ACA. (Visit the U.S. Department of Labor)
- Adjust their health insurance waiting period to be no more than 90 days.
- Make sure that employer contributions to health insurance plans are equitable to all eligible employees.
- Distribute notices to employees about the Health Insurance Marketplaces, or exchanges, by October 1, 2013. Open enrollment for private insurance through the marketplaces begins in October 2013 for coverage starting as early as January 1, 2014. The marketplaces were created to help companies and individuals comparison-shop for private insurance plans.
For businesses that don't offer a group plan, the government has created a model notice to be given employees, available for download here.
Even with the employer mandate deadline extended by 15 months, Thomas says employers with 50 or more full-time employees should start working toward mandate compliance sooner rather than later. They’ll need that time to find affordable coverage and to plan for their variable-hour work force. And key point to reiterate: firms with less than 50 workers are not subject to the employer mandate.
Disclaimer: Since the details of your situation are unique, you should always seek the services of a professional for advice specific to your business.