Dealers get a reprieve on U.S. health care mandate
WASHINGTON -- By delaying for one year a requirement that employers offer health insurance to their workers or pay fines, the Obama administration has given a reprieve to car dealers and other small-business owners grappling with how to comply with the new health care law.
The administration announced the decision late Tuesday in a blog post by Mark Mazur, the assistant secretary for tax policy at the Treasury Department. The administration said that delaying penalties until 2015 would give the government more time to simplify requirements, and give businesses more time to adjust.
That decision brought relief to companies that don't already offer health insurance to all full-time employees, including many car dealerships.
Under the law, companies that have the equivalent of 50 or more employees working more than 30 hours per week will need to provide coverage to all their full-time employees or face a $2,000 fine for each full-time employee without coverage, with an exemption for the first 30.
Many dealerships are close to that 50-employee threshold, raising the possibility they might choose to fire employees, shift employees to part-time work or postpone hiring in order to avoid substantial new costs. The average car dealership had 55 employees in 2012, the National Automobile Dealers Association said.
While the health care law is meant to lower the cost of health insurance, NADA and other small business groups have been skeptical, arguing that the law will backfire and lead to increases in insurance costs. In a statement today, NADA characterized the delay as a consequence of "a flawed law that was rushed through Congress."
"While dealers appreciate this temporary reprieve, the delay does nothing to alleviate dealers' real concerns about the long-term affordability of health care for their employees," the group said. "Congress should use this delay to revisit the law to ensure dealership employees are not forced out of employer-based health care plans because dealers can no longer afford them."
Judith Krupnick, president of Cherry Hill Volvo of Cherry Hill, N.J., told Automotive News last summer that this was exactly the situation her dealership faced.
At the time, she provided insurance to 23 of her 60 employees at a cost of about $6,000 per person. Paying fines of $2,000 per employee would be "substantially less expensive" than covering the rest, Krupnick said.
The decision will not affect large employers in the auto industry that already offer health insurance, including most automakers and suppliers.
More than 90 percent of employers with 50 or more employees now offer health benefits to full-time employees, Paul Fronstin, a senior research associate at the nonpartisan Employee Benefit Research Institute in Washington, D.C., told Automotive News affiliate Modern Healthcare on Tuesday.
The rest of the health care law will remain intact.
All individuals will still need to have health insurance in 2014 or else pay a fine. Employees who do not get coverage from an employer will be able to apply for coverage, often at a subsidized rate, through state-run insurance exchanges in states that have chosen to establish them.
Adam Rubenfire contributed to this report
For more background on how the new health insurance regulations can impact businesses, click on these links:
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