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PPACA Large Employer Mandate Delayed

In a surprising move that renewed controversy over the Patient Protection and Affordable Care Act (PPACA), the Obama Administration announced last month that it would delay for one year provisions requiring large employers to provide health care insurance to employees or pay a tax penalty.

Officially known as the Shared Responsibility Requirements, the delayed rules would have required employers with 50 or more full time equivalent (FTE) employees (30 or more hours per week) to provide health insurance or pay a $2,000 to $3,000 per employee tax penalty in 2014. The rules are now scheduled to take effect in 2015.

Although the delay affects only a small number of employers (only three percent of U.S. businesses have more than 50 employees and most of them already provide insurance), the regulations had riled some companies enough to suggest they might lay off employees (or convert some to part-time) to avoid providing insurance and paying the tax penalties. In addition, new reporting requirements and monitoring mechanisms were complex and considered burdensome by some employers. In general, they felt the new systems needed more time for effective explanation to the affected employers. Rather than press ahead, the Administration decided to diffuse the pressure and take more time to address stakeholder concerns before full-scale implementation.

The delay has no bearing on LIUNA health and welfare funds or the signatory employers and union officials who support the funds through collective bargaining and trustee oversight. Participation in a collectively bargained health insurance plan fulfills large or small employer obligations under PPACA while ensuring the administrative capacity to address essential benefits and eligibility rules as well as assistance with mandated participant communications, federal reporting and other requirements of the law.

The delay also has no bearing on PPACA’s “individual mandate,” effective January 1, 2014, that requires virtually all Americans and legal U.S. residents to carry some kind of insurance. Laborers will meet this requirement through their participation in a LIUNA health and welfare fund program. To assist other Americans who cannot obtain insurance through an employer, states and the federal government are readying online insurance shopping sites known as “insurance exchanges.” These are scheduled to be open on October 1, 2013.

[Steve Clark]

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