A large sigh may be resonating from the business community with Tuesday's announcement of a delay for large businesses to comply with parts of Obamacare, but local tax experts are warning it should not be considered a permanent reprieve.
In a surprise announcement, President Barack Obama's administration late Tuesday announced the business mandate for large employers to provide health insurance to their full-time employees will be deferred for one year and not become effective until 2015.
While the delay may ease employers' immediate concerns, Youngstown tax attorney George Millich said the next year should be used by local employers to study and comply with new stipulations on things like who is considered full-time, how affordable health insurance should be for employees and during what time frame employees' hours should be monitored.
Millich practices law with Harrington, Hoppe and Mitchell and has closely studied the new law passed in 2010 and scheduled to take effect in 2014.
Under the health law, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance. Originally, that requirement was supposed to take effect Jan. 1. It will now be delayed to 2015.
Millich said many employers had put off preparing for implementation, expecting challenges raised before the U.S. Supreme Court to find the law unconstitutional.
When that didn't happen, many employers may have been caught off guard. Now Millich fears employers may delay preparations thinking that mid-term elections may lead to the law being overturned.
"I would caution people with that viewpoint," Millich said. "You really should take this opportunity to push forward, do your analysis."
Jim Rosa, a principal in the tax department for Hill, Barth & King accounting firm in Boardman, said since the law passed, business groups have complained that the provisions are too complicated and would cause job losses.
"Some businesses have reacted to the business mandate by cutting workers' hours while others have simply delayed hiring new employees," Rosa said. The law defines full-time employees as those who work 30 or more hours a week.
If the law would have taken effect in January, a "measurement period" in which employees should be tracked to determine full- or part-time status would have begun this week.
Administration officials said the delay was in response to employers' concerns about the law's reporting requirements. Delaying the law's "employer responsibility" provision would give employers more time to comply and give the government more time to consider ways to "simplify the new reporting requirements consistent with the law," according to a blog post from Mark J. Mazur, the assistant secretary for tax policy at the Department of Treasury.
"Whatever the reason, I think employers should be exhaling, but by no means, don't assume that this law is going to go away," Millich said. "You have been given a year and a half to look into it."
It's unclear what effect the announcement will have on the health law's goal of providing coverage to millions of American who do not now have it. Although many large employers do provide insurance, the benefits packages vary widely. Workers whose employers do not offer coverage, and now have an additional year to do so, will be forced to go to the exchanges to get coverage.
Obama administration officials did note that the Oct. 1 scheduled start of other provisions of the act will still begin as planned. Those provisions include online marketplaces, or exchanges, or the subsidies intended to help individuals with low to middle incomes purchase coverage or the requirement that most individuals purchase coverage or pay a fine.
The delay in the employer requirement does not affect the law's requirement that individuals carry health insurance starting in 2014 or face penalties. The so-called individual mandate was challenged all the way to the Supreme Court, which ruled last year that the individual requirement was constitutional, since the penalty would amount to a tax and be collected by the Internal Revenue Service.
The Associated Press contributed to this story.