Advisers back delay in health care law

Advisers cheered the Obama administration's decision to delay for one year the implementation of the employer mandate portion of the Affordable Care Act of 2010. In a blog entry on the Treasury Department's website yesterday, Mark J. Mazur, assistant secretary of tax policy, said the administration will wait until 2015 to implement the ACA's mandatory stipulation that employers with more than 50 workers provide health care coverage. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so,” Mr. Mazur wrote. “First it will allow us to consider ways to simplify the new reporting requirements consistent with the law,” he wrote. “Second it will provide more time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible to their employees.” Advisers applauded the move, as it gives business owners another year to prepare for the mandate. They say it also gives the administration the opportunity to iron out how to apply the requirement to employers. “The law has its complexities, and there were delays in implementation because of the fights in court. [The delay] was a gutsy move and a smart move,” said Carolyn McClanahan, director of financial planning at Life Planning Partners. “We need health care reform. Let's take this next year and figure out how to implement it correctly.” Michael Kitces, a partner and director of research at Pinnacle Advisory Group Inc., questioned whether the delay in the implementation of the employer mandate could affect the rollout of other portions of the ACA — the mandate that every American have some form of health coverage and the implementation of health care exchanges in which individuals can buy private-sector health insurance products at competitive prices. “The issue is there were some deliberate reasons why the employer mandate, the individual mandate and the health insurance exchanges were intended to roll out together,” Mr. Kitces said. “It's not entirely clear how the systems will start shifting with a tiered rollout.” Indeed, one possibility is that employers will push people toward the exchanges as early as this fall, now that they can do so without worrying about fines for uninsured employees, Mr. Kitces noted. The administration still expects the insurance exchanges to be up and running by Oct. 1. “Ultimately in the long run, the way the employer mandate was written is an incentive to stop offering coverage,” Mr. Kitces said. “Years from now, you'll have a choice as an employer: Pay $15,000 a year for premiums or pay the penalty and let your workers do it on their own. As that gap widens, the premium assistance gets bigger for the employers.” There was also the possibility that the employer mandate might change between now and the implementation date in 2015. As it stands, firms are to be required to provide coverage if they have more than 50 employees, and the workers must log at least 30 hours a week to get that coverage. There is the possibility that there could be tweaks to those provisions before the effective date, Mr. Kitces added. Ric Edelman, chief executive of Edelman Financial Group, doesn't see the delay as an accommodation to business owners as much as a means for the Obama administration to avoid the issue until after the 2014 midterm elections. “This is going to have tangible effects on companies and their employees including layoffs, pay cuts and reductions in profits,” he said. “It's going to make people consider whether they favor the law as much as they thought they did. By delaying it until 2015, the administration can provide cover for those who supported the law from now angry voters.”