Obama Administration Announces Delay in Key Health Care Requirement

Under pressure from business groups, the Obama administration announced Tuesday that it is postponing the implementation of a major piece of its signature health care law. A requirement that would have required large and medium-sized businesses to offer health insurance to employees next year or pay a fine will be delayed until 2015.

Under the Patient Protection and Affordable Care Act, most businesses with at least 50 full-time employees will need to have a health plan. The number of full-time employees at a business will be based on the number of people working 30 hours per week.

Businesses that are required to offer insurance and don’t do it will face an annual fine of $2,000 per employee but will be allowed an exemption for their first 30 workers. For example, an employer with exactly 50 full-time employees will be fined $40,000.

The employer mandate to have a health plan won’t apply to businesses with fewer than 50 full-time employees. Businesses are also allowed to ignore it if none of their employees purchases their own insurance and qualifies for a government subsidy. In effect, this generally means that if a business with at least 50 employees wants to avoid having a health plan, it must pay all its employees enough so that their household income is above 400 percent of the poverty line.

Despite this postponement for businesses, the requirement for most individuals to have health insurance in 2014 remains intact.  Government subsidies for citizens and legal residents with household incomes below 400 percent of the poverty line will be available at that time.

More details about the requirement to cover employees are expected to be announced in the next few months. A comprehensive review of the Patient Protection and Affordable Care Act will be part of Real Estate Institute’s insurance continuing education self-study package for 2014.

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