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TUESDAY, Feb. 11, 2014 (HealthDay News) -- The Obama administration's latest decision to delay part of the Affordable Care Act affecting U.S. businesses is dividing politicians and some business leaders and raising new questions about the timing of the health law's implementation.
The new rule, announced late Monday, gives mid-sized employers an extra year to comply with the health-reform law's "employer responsibility" provision. This requires companies of a certain size to offer insurance coverage to their full-time workers or pay a penalty.
Businesses with at least 50 but fewer than 100 employees now have until Jan. 1, 2016 to provide health insurance to their full-time workers or pay penalties, the U.S. Treasury Department said. The previous deadline had been Jan. 1, 2015.
"While about 96 percent of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate," Assistant Treasury Secretary for Tax Policy Mark Mazur said in a statement from the department.
It's the second time the Obama administration has delayed a deadline for employer coverage.
One of the cornerstones of the controversial law is that most adult Americans have health insurance -- either through their employer or on their own -- or pay a penalty in the form of a tax. This is called the "individual mandate."
John Holahan, a fellow in the Urban Institute's Health Policy Center, said the delay announced Monday staves off penalties for businesses whose workers might seek insurance coverage through the newly created marketplaces, sometimes called exchanges.
"If they (employers) have already decided to offer (coverage), then the mandate really had no effect. If they didn't offer (coverage), it may have an effect," he said. "The real important thing is that with the individual mandate, workers are going to be pushing employers to offer coverage."
Larger businesses, with more than 100 employees, must provide coverage to their employees beginning Jan. 1, 2015, or pay penalties.
The Affordable Care Act, sometimes called "Obamacare," doesn't require small businesses with fewer than 50 workers -- roughly 96 percent of all U.S. businesses -- to provide health insurance coverage.
The new rule issued Monday also clarifies that volunteer firefighters, emergency responders and seasonal workers will not be considered full-time employees. In addition, teachers and school employees won't be considered part-time workers simply because they get the summer off, the Treasury Department said.
House Minority Leader Nancy Pelosi (D-Calif.) said the delay reflects the Obama administration's commitment to "smoothly implement" the Affordable Care Act. "This common sense approach will protect employers already providing quality insurance, while helping to ensure that larger employers are prepared to meet their responsibility to their hard-working employees," she said in a statement.
Republicans characterized the latest delay as a tactic to postpone negative reaction to the law until after November's mid-term elections.
"Much like the individual mandate, the business mandate is bad for middle-class families and it will harm economic growth, but the answer to this problem is not random unilateral changes, stoking uncertainty," said House Majority Leader Eric Cantor (R-Va.).
Reaction from the business community was mixed.
Neil Trautwein, vice president and employee benefits policy counsel at the National Retail Federation, said: "The administration should receive a gold medal for recognizing the enormous complexities of the Affordable Care Act, and its agility and flexibility in working with retailers and others in crafting these much-needed and commonsense reforms and revisions."
U.S. Chamber of Commerce president and CEO Thomas Donohue welcomed the delay but said more needs to be done to "alleviate uncertainty and ease the burden on businesses and their employees."
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SOURCES: U.S. Department of the Treasury, statement and fact sheet, Feb. 10, 2014; John Holahan, fellow, Urban Institute's Health Policy Center; Nancy Pelosi (D-Calif.), House Minority Leader, statement, Feb. 10, 2014; Eric Cantor (R-Va.), House Majority Leader, statement, Feb. 10, 2014; National Retail Federation, news release, Feb. 10, 2014; U.S. Chamber of Commerce, statement, Feb. 10, 2014