When the Obama administration delayed the employer mandate portion of the Affordable Care Act (ACA), business owners were given an additional 365 days to comply with the new requirements. However, the delay has actually brought up additional questions that, as of now, are unanswered. In time these questions will be answered, but until then, business owners who have not yet complied with the employer mandate should develop a clear timeline over the next year so they are prepared well in advance of the deadline. Here are a few of the questions that have come up as a result of the delay.
How will the exchanges know if an applicant has access to employer-sponsored insurance?
Without employers reporting who is eligible for their health insurance, it will be very difficult for those monitoring the exchange to know which applicants are actually eligible for enrollment in the exchange as well as federal subsidies. The IRS will have access to income information, but who will verify access to insurance?
Who will pay for employees who receive exchange subsidies?
If an employer offers benefits to an employee and the employee’s cost exceeds 9.5% of his or her income and that employee’s income is less than 400% of the Federal Poverty Level (FPL), the employer must pay $3000 per employee who receives a premium subsidy. This penalty is meant to offset the cost of subsidizing the employee. Because the penalty has been delayed one year, the government will no longer collect that money, but the employee will still be eligible for a premium subsidy. Where would this money come from?
Will the penalty be $2000 and $3000 or will it be more?
Had all of the ACA provisions rolled out as planned, employers would see $2000 penalties in 2014. However, in 2015, the “penalty payment amount would be indexed by the premium adjustment percentage for the calendar year.” (SHRM.org) So will the penalty be $2000 or will it be what it would have been raised to in 2015 had the mandate started in 2014?
Will anything else be delayed?
Up until this point there have been quite a few hiccups in ACA implementation. Forced Medicaid expansion was found to be unconstitutional and therefore only 23 states have agreed to expanded it. 27 states have decided to default to a federal exchange, and the ability for small business employees to choose from multiple carriers has been delayed for one year. This brings into question whether other complex ACA provisions will be implemented by the deadline. Will the exchanges be ready by October 1? Will the individual mandate stay even though employers are not required to offer insurance?
What should I do as a business owner?
If you have additional questions regarding the roll-out of ACA and what these changes or delayed mean for your business and your employees, please contact SOI today. Our HR experts can help guide you through the complexities of the Affordable Care Act.
About SOI
SOI is a leading professional employer organization (PEO) for small and medium-sized businesses (SMBs) serving as a trusted partner in integrated human resource (HR) compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing. SOI is based in Charlotte, NC and supports tens of thousands of worksite employees throughout the U.S. For more information, visit SOI.com
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