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Businesses Have Additional Year Before Facing Obamacare Penalty Fees

Businesses Have Additional Year Before Facing Obamacare Penalty Fees
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Senior Entrepreneurship Writer at CNBC
3 min read

If you were struggling to get your business ready for the impending health-care reform, you just got a one-year extension.

The Obama Administration announced that it will delay collecting fines on the employer mandate for businesses with 50 or more full-time or full-time equivalent employees until 2015, according to a blog post on the U.S. Treasury Department's website. Before this announcement, businesses would have been required to offer their employees health coverage or face an annual penalty of at least $2,000 per employee starting in 2014.

The Obama Administration has had conversations with businesses about the implementation of the Affordable Care Act, says Mark J. Mazur, the assistant secretary for tax policy at the U.S. Department of the Treasury in the blog post, and many businesses expressed concern over the fast-approaching deadlines. "We have listened to your feedback. And we are taking action," says Mazur. More details on the delay of the law will be released in the coming week, he says.

Related: Small-Business Owners Still Confused About Health-Care Reform

Businesses told the Administration that the process that was being established to report their employees' access to and enrollment in health insurance was burdensome, says Valerie Jarrett, a senior advisor to President Obama who is responsible for overseeing the Office of Public Engagement and Intergovernmental Affairs, in a statement on the White House's official blog. "As we make these changes, we believe we need to give employers more time to comply with the new rules," Jarrett says.

The announcement was cheered by the International Franchise Association, a Washington, D.C., industry advocacy organization. Many franchisees have more than 50 employees and will be affected by the fee. The IFA called for additional reprieve for small businesses.

"This will relieve the onerous and costly burdens of the ACA for one year, and allow the Administration to reexamine its implications for small businesses," says IFA President and Chief Executive Steve Caldeira, in a statement. "We look forward to continuing our work with the Administration to ensure that the Affordable Care Act is implemented with minimal negative impact on franchise small-business owners."

Related: Health-Care Reform Creates Boon for Tech Startups

Meanwhile, one small-business advocacy organization says the fee delay won't impact the majority of business owners. Ninety-six percent of businesses in the U.S. have fewer than 50 employees, says Terry Gardiner, the vice president of policy and strategy at the Small Business Majority, in a statement. And of those businesses with more than 50 employees, 96 percent already offer health insurance and will likely continue to do so regardless of the fee, he says.

The health-insurance exchanges, says Gardiner, are the most critical piece of the health-care reform for small businesses because they will provide marketplaces where individuals and business owners can compare, pick and buy health insurance. There has been some concern that the health-care exchanges for small businesses won't be up and running by the Oct. 1 deadline. However, the U.S. Department of Health and Human Services says that it is on track to have the exchanges implemented on time. "The most important provisions for small-business owners in the law are still moving full steam ahead, including health-insurance exchanges," says Gardiner.

Related: Small-Business Health-Care Exchanges May Be Delayed

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