Despite the ACA delay, employers should offer 2014 health plan

The delay of the Affordable Care Act's employer mandate gives businesses and health plans an opportunity to better prepare, not to put off what they know they must do.
The pay-or-play delay has positive potential for the employer-employee relationship, as employees will be able to see what plan sponsors want to do before they have to do something, said Dave Morgan, senior employee benefits advisor at Morris & Garritano Insurance Services.
"It widens the window for plan sponsors to re-calibrate their contribution to new compliant plan designs and communicate their value proposition in the new context of the ACA marketplaces," he said.
In July, the Obama administration said businesses with more than 50 employees have until 2015 instead of 2014 before they must offer them insurance. The delay is meant to allow employers to update their coverage and reporting systems as required by law.
Employers had faced a $2,000 penalty beginning Jan. 1 for each full-time employee who did not get health coverage. Some critics of the ACA had predicted that employers would cut hours or employees to avoid the requirement.
Businesses who wish to sponsor a plan in 2015 should strongly consider a 2014 offering that will encourage high participation in the group, Morgan said.
"If there is no 2014 offering or if it is inadequate or unaffordable, it may be difficult in 2015 to attract employees who have enjoyed subsidized coverage the previous year," he said.
The Congressional Budget Office (CBO) estimated that the one-year delay of the employer mandate would cost the government $10 billion in penalty payments that would have been assessed on businesses in 2014 and collected the next year. Similarly, the cost of health insurance exchange subsidies will increase by $3 billion because some individuals will obtain their coverage in the online marketplaces when their employer doesn't offer it.
"Most large employers currently offer health insurance coverage to their employees, and because the delay is only for one year, few employers will change their decisions about offering such coverage," said Douglas Elmendorf, CBO director, said in the July 30 report.
Still, as a result of the delay, CBO expects about one million fewer individuals to enroll in employer-based coverage in 2014 than was projected in May. About one half will go uninsured and the others may obtain coverage through Medicaid.
In a recent survey of 881 employers conducted before the delay, the consulting firm Mercer found one third reported that they do not extend coverage to all employees working 30 or more hours per week, although many had made plans to do so in 2014. "Most have not announced changes yet, and if they have an extensive part-time work force, the money to be saved by not expanding coverage in 2014 could be considerable," said Tracy Watts, a Mercer senior partner in a news release.
Moreover, half of the employers in the survey expressed concern about how to handle employee questions about health insurance exchanges and 43 percent were apprehensive about establishing processes and systems for interacting with exchanges.
Timothy Jost, Washington and Lee University law professor, told a recent congressional hearing that the Department of Treasury's approach for establishing employer reporting requirements was complex.
"If taking a little more time could result in simplification, that should relieve a burden on American businesses. There is little evidence that employers will rush to exit employee coverage, (but) employers have been dropping employee health coverage for some time, and this is likely to continue," Jost said.
He cited a recent survey by the International Foundation of Employee Benefits Plans, in which less than 1 percent of large employers reported that they would drop coverage in the next year. And 70 percent said they offered health insurance to retain current employees and 65 percent to attract future staff.