The one-year delay in Obamacare's employer mandate was needed to let companies figure out new reporting rules, hire staff and rework computer systems to comply, business leaders said.
The one-year delay in the Affordable Care Act's requirement that most employers provide health insurance was necessary because the government hadn't yet published final rules or forms to tell companies how to comply, business representatives said Wednesday.
The process of gathering information about employees' benefits and whether companies met specific requirements under the law could cost a large corporation millions of dollars — on top of the cost of insurance, corporate health care consultants and trade associations say. The final rules were expected to be published as soon as Friday, before the Obama administration announced the delay.
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The year-long delay should be enough to let businesses figure out what's required and organize themselves to comply, said Helen Darling, president
of the National Business Group on Health. If the administration had tried to implement the so-called employer mandate on Jan. 1, the likely uproar over rushed compliance may have undermined support for the overall law, said Harry Conaway, a partner at health-benefits consulting firm Mercer.
"The larger you are, the more difficult the reporting is likely to be,'' said Darling, whose group represents more than half of Fortune 100 firms.
Large companies often have their employees' human-resources information siloed in several different computer systems, with information about payroll separated from information about benefits, Conaway said. "Companies that have done mergers or acquisitions (also) have systems they have never merged together,'' he said.
The administrative hassle was a bigger problem for large employers than the mandate itself, since most large companies already provide insurance, Mercer partner Tracy Watts said. In a survey employee benefits consultant Mercer did in May, 23% of companies required to report to the Internal Revenue Service about employees' health insurance coverage under the health care act said that they didn't know how, she said.
"You need to know the rules to play the game,'' said Kevin Kuhlman, director of legislative affairs for the National Federation of Independent Business, which represents smaller companies.
The IRS published proposed rules for the employer mandate on Jan. 2, took public comments through March, and held a hearing in April, Kuhlman said, but had not yet published the final requirements.
Business lobbies, such as the U.S. Chamber of Commerce and NFIB hope the delay also gives Congress time to change the mandate, especially by increasing to 40, from 30, the average number of hours an employee must work before the company is required to pay for insurance, said Katie Mahoney, executive director for health policy at the chamber.
Confusion over the employer mandate may have been caused partly by resistance to the overall law by state level politicians, said Tom Billet, a consultant at benefits consulting firm Towers Watson.
The IRS and the Department of Health and Human Services have had more work than expected because more than half of states have declined to build statewide marketplaces where individuals can shop for insurance, he said. Instead, federal officials have had to prepare to serve those citizens, he added.
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