Owing to the tremendous logistical challenges associated with the ACA’s implementation, limited SHOP exchange participation, and pushback from employers nationwide, the Obama Administration chose to delay the implementation of the employer penalty and certain reporting requirements until 2015.
The administration has recognized that employers need more time and clarification of the rules before implementing the mandate.
The additional year will provide employers with more time to advocate for structural changes to the ACA, whether it’s altering the definition of a full-time employee or eliminating the employer mandate all together. Still, delaying the penalty will likely do very little to foster structural changes to employee benefits in the near term. Nevertheless, the one-year delay will provide employers with added time to observe ACA implementation and develop reactionary maxims that will ultimately guide their benefit strategies in 2015.
Health insurance payers are also applauding the Obama Administration for this display of flexibility.
Providing employers with an extra year to evaluate benefit options will give health plans more time to engage employers and educate them on key provisions of the ACA, while also making in-roads to thwart employers from dropping insurance and prevent the erosion of employer-sponsored insurance.
The Obama administration gets a win overall, but their decision to delay provides ammunition for opponents of the law.
Although the delay was explained as a technical issue, the political optics of the Administration acting on employer concerns are obvious. For their part, the ACA’s opponents have quickly declared the delay as a manifestation of a bad law. These talking points establish a thematic, political narrative both parties will leverage as broader ACA implementation continues.
Enrollment in the individual, small business and private exchanges will now flux; but not by much.
Employers currently offering coverage are unlikely to make material changes to their offerings. The delay will definitely ebb progress of SHOP enrollment and lessen private exchange activity in 2014. Employers who are not currently offering coverage, but may have been incentivized to offer coverage because of the penalty, will likely stay out another year, decreasing overall commercial enrollment. However, because the employer penalty wasn’t ever sufficient to materially change the number of employers offering coverage, group market enrollment will stay somewhat below what it might have been with the penalty (excepting the small group). Individual market enrollment will hold steady, and aggregate enrollment will slightly decrease.
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