WASHINGTON – The Obama administration plans to postpone a key requirement of the new health care law, delaying until 2015 penalties on large employers that don’t offer health coverage.
The one-year delay, announced by the Treasury Department late Tuesday in response to complaints from businesses, marks a major retreat in implementing the 2010 Affordable Care Act.
It also underscores the immense pressure the administration is under as it tries to roll out the extremely complex law. By next year, most Americans were supposed to be guaranteed access to health coverage, even if they have pre-existing conditions.
“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark J. Mazur, the assistant secretary for tax policy, wrote in a post on the department’s website.
Mazur emphasized that other key parts of the law remain on track to be implemented next year, including tax credits to help low- and moderate-income Americans buy insurance, if their employers do not provide health benefits.
The decision means one of the most controversial provisions of a law assailed by Republicans will not be implemented until after the 2014 midterm elections. Many businesses have chafed at the measure’s myriad requirements.
The requirement that companies with more than 50 full-time workers provide insurance or pay a fine is designed to prevent companies from dropping health benefits once the government offers subsidies to help individuals buy coverage. The law’s authors worried that companies would be tempted to stop offering coverage, shifting the cost of health care to the government.
Under the law, large employers that do not provide insurance would be fined $2,000 per employee beyond the first 30 employees.
Douglas Holtz-Eakin, a former director of the Congressional Budget Office who now heads the conservative American Action Forum, warned that without the penalty employers would have an incentive to drop coverage.
But several business leaders and experts said the delay is unlikely to prompt many businesses to change their benefits strategies.
“(Businesses) know these rules will go into effect sooner or later,” said Bill Kramer, executive director for national health policy at the Pacific Business Group on Health, a nonprofit coalition that includes large employers such as Boeing Co. and Walt Disney Co.
Neil Trautwein, vice president of the National Retail Federation, said he expected few of his members to change their health plans until it was clear what would happen in 2015.
The delay drew swift praise from leading business groups, including those representing restaurants and retailers.
“This is very welcome news,” Trautwein said in an interview, comparing the announcement to “pre-July 4 fireworks.” “This is a pragmatic decision that recognizes that employers were not ready, the administration was not ready and the (health insurance) exchanges were not ready.”
Republican lawmakers on Capitol Hill, who are still trying to derail the law, kept up their criticism.
“This announcement means even the Obama administration knows the ‘train wreck’ will only get worse,” House Speaker John Boehner, R-Ohio, said in a statement. “I hope the administration recognizes the need to release American families from the mandates of this law as well.”
The administration has given no indication that it plans to delay the penalty on Americans who do not get coverage either from employers or on their own. That fine is slated to start at $95 next year.
Among employers with more than 200 employees, 98 percent offer health benefits, according to an annual survey by the nonprofit Kaiser Family Foundation and the Health Research & Educational Trust, and 94 percent of those with between 50 and 199 employees provide insurance.
Small businesses are less likely to offer health benefits, but they are exempt from the health law’s mandate.
The mandate nonetheless has been a lightning rod for criticism in the business community, particularly for employers that rely on part-time workers.
The complex method used to assess penalties on employers will require multiple computer systems to track how many hours employees worked, whether they could afford coverage and whether they qualified for federal aid, if they did not get health insurance at work.
Particularly nettlesome for many employers is the law’s system of calculating full-time and part-time workers. The law exempts employers with fewer than 50 employees working 30 or more hours per week.
A survey of about 900 employers last month found that almost a quarter of the companies were still unsure how to track the hours of employees who work variable schedules.
The Treasury Department indicated Tuesday that it will provide further details this summer about how it will implement the delayed requirements in 2015.