WASHINGTON -- The Obama administration will phase in a requirement that large employers provide their workers with health benefits in 2015 and 2016, offering businesses more relief from the so-called employer mandate in the president’s healthcare law.
Under regulations issued Monday, only employers with more than 100 full-time workers will be subject to fines in 2015 unless they offer coverage.
The requirement that all employers with more than 50 full-time employees provide health benefits or pay fines -- which was supposed to begin this year under the Affordable Care Act -- will not take effect until 2016.
The phase-in follows the administration’s decision last year not to impose the penalty on employers at all in 2014, a move that drew widespread criticism from political opponents of the healthcare law.
But administration officials said Monday that the additional phase-in period for a crucial part of the law was necessary to help businesses adapt to the new requirement.
“While about 96% 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,” said Assistant Treasury Secretary for Tax Policy Mark J. Mazur. “Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees.”
The new regulations also allow employers to offer coverage to only 70% of their workers in 2015. They will have to provide coverage to 95% of full-time workers in 2016.
The requirement that companies with more than 50 full-time workers provide insurance or pay a fine is designed to prevent firms from dropping health benefits once the government offers subsidies to help individuals buy coverage.
The law’s authors worried that firms would be tempted to stop offering coverage, shifting the cost of healthcare to the government.
Under the law, large employers that do not provide insurance will be fined $2,000 per employee beyond the first 30 employees.
The new regulations are almost certain to provide new fuel to Republican critics of the law, who have charged repeatedly that the administration has exceeded its authority in selectively implementing parts of the law.
But administration officials said Monday that the law allows such adjustments.
“The secretary has very broad authority to implement the tax law in a way that benefits tax administration, and we think the phase-in approach really is a way to administer the law better and enhance overall compliance,” a senior Treasury Department official said.