Obamacare employer mandate takes effect today
The Obamacare employer mandate that requires companies with more than 100 employees to offer insurance coverage to 70% of them goes into effect January 1, 2015. Those companies with between 50 and 100 employees will be forced to offer coverage next year.
The employer mandate was delayed a year for political reasons. Employers are not expected to have a problem covering employees, but the reporting requirements to the IRS are a nightmare.
But human resources departments will grapple with IRS reporting requirements from day one to document their compliance and avoid tax penalties, a task that can get Byzantine and expensive for companies with lots of part-time workers and seasonal workers, who add up to full-time “equivalents.”
The employer mandate has been a political football since the health care law passed in 2010, as critics say employers have stopped hiring or cut hours to stay under the mandate’s thresholds.
The White House delayed the mandate twice, moves that Republicans lambasted as political ploys to delay enforcement until after the midterm elections.
The issue will be thrust back into the public eye in the coming weeks, when congressional Republicans taking control of both chambers try to force changes to the rule.
GOP lawmakers say leadership will hold votes to change the mandate’s definition of full-time work from 30 hours to 40 hours, as even some Democrats fear the nontraditional definition is hurting the workforce.
Republican lawmakers have coined a phrase, “the 29ers,” to describe people whose hours were cut because they were suddenly considered full-time workers eligible for health insurance.
Rep. Michael Burgess, Texas Republican, told The Washington Times in mid-December that the vote would raise awareness among any employees who do not realize they are subject to IRS reporting requirements under the mandate.
Ms. Pearson said the shift from 30 hours to 40 hours should not be a major problem for companies, which would “happily adjust” their reporting.
But Congress’ budget scorekeepers have estimated the move would raise deficits by $73 billion over 10 years, as the government would collect fewer penalty payments.
Massive confusion is likely this tax season as employers and individuals alike will struggle with new forms and new requirements. This will be a boon to tax prep firms like H&R Block, who have been advertising their expertise in Obamacare compliance.
The shift to a 40 hours a week mandate will probably eliminate some jobs, but not affect as many employees who would have their hours cut to under 30. And when the dust clears, it's likely that compliance costs will make it more expensive for businesses and individuals alike.