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Penalties for employers that don’t offer health insurance won’t take effect next year after all. The U.S. Department of Treasury announced in a blog post Tuesday that it will delay implementation of the rules by a year.
The employer penalties will now take effect in 2015 instead of 2014.
Many staffing firms and other employers had been scrambling to prepare for the upcoming penalties as the original deadline loomed.
Ultimately, the penalties will nonetheless take a financial bite: Employers with 50 or more full-time equivalent employees that don’t offer healthcare insurance would face a penalty of $2,000 per year multiplied by all their full-time employees if at least one full-time employee gets a tax credit to buy insurance. Even employers that do offer insurance can face a penalty of $3,000 per year for each employee who receives a tax credit to buy insurance if the insurance is not affordable for the employee or does not provide minimum value.
The blog announcing the delay was written by Mark Mazur, assistant secretary for tax policy at the U.S. Department of the Treasury. Read the post here.
Mazur wrote the delay will provide more time to find ways to simply reporting requirements for employers and healthcare insurers under the law. The administration is still working on proposed rules for insurers and employers to use when reporting levels of healthcare coverage by workers.
“The postponement of the employer mandate is certainly a welcome development for the staffing industry,” said George Reardon, special counsel at employment law firm Littler Mendelson, who has followed the Affordable Care Act closely. “However, the industry’s issues with this law do not arise from its implementation timing but from its statutory provisions and requirements, which, without great modifications, promise to threaten the industry’s continued success.”
Reardon continued, “The administration’s explanation for the delay — that the reporting rules are too complicated — is reminiscent of an earlier attempt to broaden healthcare coverage in the United States. The Tax Reform Act of 1986 introduced a new Internal Revenue Code Section 89, which would have imposed pension-like coverage rules on health insurance and other welfare plans. In response to protests by the business community about the extremely complex administration mandated by that new section, Congress repealed it before it was scheduled to take effect.”
For the latest article on healthcare reform in Staffing Industry Review magazine, please click here.