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Reasons floated for delay in healthcare reform’s employer mandate

In the days after the Treasury Department’s announcement July 2, 2013, that it was delaying implementation of the employer mandate of the health care reform law for one year until January 2015, benefits attorneys were atwitter with theories about the reasons behind the delay.

For some, the stated reason for the change -- the need to simplify and prepare for new employer reporting requirements -- didn’t seem like the whole story.

 

Hill Democrats called for delay

Congressional Democrats pressured the Obama administration to delay implementation of the employer mandate after hearing complaints among their constituencies, suggested Chris Condeluci, an attorney in Venable’s Washington, D.C., district office, in a July 8, 2013, interview. The complaints had resulted in legislative proposals to amend the law to change the definition of a full-time employee from one who works 30 hours per week to one who works 40 hours per week.

“If brought to a vote, it would pass,” Condeluci said. With the delay, there was no need to bring up this amendment, he added. But the amendment might be snuck into larger legislation to move out of Congress at the end of the year, he added.

For Paul Hamburger, an attorney at Proskauer Rose in Washington, D.C., the “sheer complexity” of the Patient Protection and Affordable Care Act (PPACA or ACA) was reason enough for the delay. There are “decades of employment practices in different industries, and they are trying to fit a uniform structure on something built up over decades. That’s very hard.”

The fact of the matter is that the health care reform law was resulting in workforce realignment and restructuring, including firing some employees and reducing others’ hours. Now Treasury has a little more breathing room and so do employers, who, with more time, might not restructure their workforces, Hamburger said.

 

DOMA impact?

It’s also possible that the Defense of Marriage Act (DOMA) ruling helped bring about the delay. There has been a cry for regulations and guidance from federal agencies in the wake of the Supreme Court’s determination that DOMA’s definition of “marriage” and “spouse” was unlawful. Federal agency staff already were busy working on PPACA before the DOMA decision, and may have thrown up their hands, said “We can’t do it all,” and pushed back some, Hamburger added.

Another likely consideration was a lack of confidence that current regulations clearly define “minimum essential coverage” to establish a baseline of features that self-insured employer-sponsored plans must have, added Tom Christina at Ogletree Deakins in Greenville, S.C. “The delay gives employers more time to coordinate the roles of their vendors, their payroll systems, their human resource information systems and other key players so that they will be ready for compliance in January 2015,” he added. “Employers might even consider a ‘dry run’ during part of 2014 to find where the weak links are in their systems.”

He cautioned, though, “An employer that assumes the delay is the first stage of repeal or a major legislative overhaul could find itself playing ‘catch up’ by this time next year.”

“The delay will provide employers the opportunity to consider their approach to the employer mandate,” remarked Ilyse Schuman, an attorney at Littler Mendelson’s employment practice at Washington, D.C., and co-chair of the Workplace Policy Institute. “The delay will provide employers the opportunity to consider their approach to the employer mandate in a more comprehensive and strategic manner, taking into consideration the impact on their benefits, workforce and business needs.”

 

Delay, not repeal

“It is important to keep in mind that the ACA was not repealed,” Schuman cautioned. “The employer mandate is a key component of a very complex and interrelated law. It has a significant impact on employers and their employees,” she noted. “To the degree that the delay gives employers more time and flexibility to respond to the mandate in a careful, thoughtful manner, it is most welcome news.”

As Garrett Fenton, an attorney at Miller & Chevalier in Washington, D.C., said, “one of the big takeaways of the delay is how frequently things change with the ACA.” He concluded by recommending that employers “stay on top of a constantly changing” law.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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