NCPA - National Center for Policy Analysis

Health Law Penalties Delayed

July 5, 2013

The Obama administration recently announced it will delay enforcing a provision of the new health care law that requires large employers to provide coverage for workers or pay a penalty in 2014, the biggest revision so far to the federal health care overhaul, says the Wall Street Journal.

  • The law, passed in 2010, requires companies with the equivalent of 50 or more full-time workers to offer health benefits starting on Jan. 1 -- or pay a penalty of at least $2,000 per employee.
  • The delay means that penalty won't kick in until 2015.

The decision reflects pressure from companies in such lower-wage industries as restaurants, retail and agriculture, which had cited a host of practical difficulties posed by the law's requirements. Most large companies in the United States already provide health coverage to their employees.

Some companies had bet the law was going to be overturned by the Supreme Court last year, or by a new presidential administration after the 2012 election. After it withstood those legal and political challenges, some firms said there was too little time remaining before the provision was due to kick in.

  • The decision follows media reports that companies had already cut back on some workers' hours to avoid exposure to penalties under the new health care law.
  • Those who work fewer than 30 hours a week aren't counted as full-time employees, according to the law.

Many of the same companies were also grappling with the refusal of states to expand their Medicaid programs to cover millions of minimum-wage workers who would otherwise become the responsibility of their employers.

  • The provision of the law that requires individuals to carry health coverage or pay a fine, starting in 2014, remains in effect, the Treasury Department says.
  • The delay only applies to the business penalties, but some experts predicted more changes could come.

The delay is the latest snag to hit the Affordable Care Act, the biggest transformation in U.S. health care since the introduction of Medicare in the 1960s. New insurance exchanges designed to allow smaller businesses with as many as 100 workers to shop for coverage have faced difficulties getting off the ground in time for open-enrollment season this fall.

Source: Louise Radnofsky, "Health Law Penalties Delayed," Wall Street Journal, July 2, 2013.


Browse more articles on Health Issues