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Few large employers to face ACA penalties, study says

August 20 2013

Relatively few large companies will pay a penalty because they don’t offer healthcare insurance when the Affordable Care Act’s employer mandate begins in 2015, according to a study released by the Rand Corporation. The study focused on the impact of the one-year delay in the ACA’s employer mandate.

The Rand study estimates only 0.4 percent of large companies — defined as those with 50 or more full-time employees — will face a penalty for not offering coverage at all.

It also estimates that 1.1 percent of large companies will face a penalty for offering unaffordable coverage to their workers. These companies represent fewer than 1 percent of the nation’s workforce, according to Rand.

The study aimed to look at effect of the employer mandate’s delay to January 2015 from January 2014. The mandate required firms with more than 50 full-time equivalent employees to offer qualifying health coverage or face penalties.

Rand reported the delay will mean 300,000 fewer people will have employer-sponsored coverage during 2014 and the federal government will collect $11 billion less to help support the ACA. Both numbers are small relative to the overall size of health insurance expansion and revenue generated, according to Rand.

But revenue would fall significantly if the employer mandate were repealed, Rand reported. It would fall by $149 billion because of lost penalties — about 10 percent of total spending offsets used to support the law.

“Our simulations show the one-year delay of the large-employer mandate will not have a substantial impact on either enrollment in health insurance or financial support for the Affordable Care Act,” said Carter Price, the study’s lead author and a mathematician at RAND. “However, eliminating the large-employer mandate would have a significant impact on financial support for many provisions of the Affordable Care Act.”

The study also found that approximately 1,000 fewer companies — less than 1 percent of large employers — will offer coverage in 2014 because of the delay.

 Rand is a nonprofit global policy think tank.

For the full report, click here.

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