The Obama administration announced recently that the Play or Pay mandate will be delayed until 2016 for employers with 50-100 employees. Employers with 100 or more employees will still be subject to the mandate for calendar year 2015.
The administration laid out a three-tier approach:
- For larger employers with 100 or more employees, 70% of employees must be offered coverage in 2015, and in later years at least 95 percent of employees must be offered coverage. Employers that do not meet these standards will be subject to tax penalties.
- Employers with 50 to 99 employees will have an extra year, until 2016, to provide coverage or pay tax penalties.
- Nothing has changed for small businesses with fewer than 50 employees. These companies will not be required to provide coverage.
The announcement of further delays comes as the administration weighs how much of the law to adjust in the wake of the rollout and the looming prospect of midterm elections.
A senior administration official said the shift reflects the administration’s observations on the law’s implementation and its willingness to acknowledge business concerns, though the official said that no single reason was behind the change.
Most large employers offer coverage to their workers, though not all employees accept it. Many of the companies that don’t offer coverage have fewer employees and are in lower-wage areas such as the hospitality, retail and agriculture sectors. They have been among the most vocal about the impact of the new requirements.
Some of those employers had begun trimming workers’ hours as a way to reduce their exposure to penalties, since the requirement to cover workers only applies to employees clocking 30 hours a week or more.
The administration also signaled on Monday that big employers that currently offer coverage voluntarily will likely see simpler requirements for how to prove that. However, full regulations detailing the reporting requirements haven’t been released, senior Treasury officials said.
Under the new rules, companies would be allowed during the phasing-in year to offer coverage specifically to a subset of employees, such as those working 35 hours or more a week, the Treasury said.
Senior Treasury officials said the shift was aimed at giving more time for smaller employers subject to the requirement to adjust and for all companies to consider the number of hours their employees worked and whether they could avoid cutting them.
The officials said employers who wanted to use the phase-in period would have to certify that they hadn’t decreased their employee numbers in order to qualify.
Treasury also set new rules for how the requirement would apply to workers such as volunteers and seasonal employees, saying that employers wouldn’t be penalized for failing to offer those people coverage, regardless of the number of hours they were working.
In recent months the administration has made a series of changes to the law that have further blunted its full impact this year. It has asked insurers to temporarily reinstate policies that had been canceled because they didn’t meet new requirements set by the law, even though the administration had previously described those plans as inadequate.
The botched launch of online insurance portals also prompted the Congressional Budget Office to revise its estimates for the number of people who would use the exchanges this year to 6 million, as well as another 8 million people who would gain coverage by signing up for Medicaid.
