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Obama administration delays another health care rule for small businesses (Washington Post)

One of these days, employers will experience the full effects of Obamacare — but not yet.

In the latest in a long string of delays in enforcing the rules under the health care overhaul, the Internal Revenue Service and Treasury Department announced on Wednesday that they will wait until summer to start enforcing financial penalties on small businesses that provide so-called Health Reimbursement Arrangements to their employees.

Under HRAs, employers provide spending accounts that their workers can use to cover a portion of the cost of buying individual health plans. The arrangements, which give employers a tax-free means to help pay for their workers’ health costs, do not comply with insurance standards in the Affordable Care Act, commonly known as Obamacare, according to Treasury guidance issued in the fall of 2013. Consequently, employers who elect to continue offering HRAs could be fined as much as $100 per day per employee.

In a public notice, IRS and Treasury officials announced that those penalties (in the form of excise taxes) will not be levied against noncompliant small businesses until July, giving many employers a little extra time to adjust to the new rules.

“The Departments understand that some employers that had been offering health coverage through an employer payment plan may need additional time to obtain group health coverage or adopt a suitable alternative,” the notice reads. Officials also hinted at the fact that the new online health insurance exchanges set up under the law, which were meant to give small businesses more choices and more affordable health insurance options, haven’t quite delivered.

“The market is still transitioning and the transition by eligible employers to SHOP Marketplace coverage or other alternatives will take time,” they wrote.

In regards to the rules in the health care law, the delay is nothing new for employers. Most notably, the Obama administration has several times pushed back the start of penalties for business that do not provide adequate health insurance to their employees, first pushing the entire deadline back one year and then last year announcing an even more gradual, tiered (by company size) rollout.

A year earlier, the administration instituted a one-year delay in enforcing rules requiring companies to report their health insurances costs on employees’ tax forms. Officials also delayed additional rules requiring owners to provide equal coverage to all of their employees, and they later postponed fines on health plans that don’t meet certain coverage criteria in the law.

At this point, the small business community has had about enough of the temporary reprieves and is calling for permanent solutions.

“This temporary delay serves as an important immediate step to protect small businesses from costly penalties when trying to assist employees with the purchase of health insurance,” Amanda Austin, vice president of public policy at the National Federation of Independent Business, said in a statement responding to the announcement. “However, another delay to Obamacare does not fix the underlying problems – which the administration is conceding with these actions.”

Research by the NFIB, which has staunchly opposed the health care overhaul since it was being debated in Congress, suggests that one in seven small businesses that do not provide health care plans offer some type of reimbursement arrangement.

Katie Vlietstra, vice president for government relations and public affairs at the National Association for the Self-Employed, conveyed similar frustration, calling the short delay “welcome news for our community” but insisting that “a long-term, legislative solution is still urgently needed.” She added: “America’s smallest employers need the stability of a permanent fix in order to continue to utilize this critical tool to help provide health care coverage to their employees.”

Austin’s and Vlietstra’s groups have support in Congress. Reps. Mike Thompson (D-Calif.) and Charles Boustany (R-La.) in December introduced legislation that would do precisely what the small business groups are asking for, requiring the IRS to permit small firms to continue offering HRAs. Theirs is one of many proposed tweaks to the health care law that are expected to be considered and potentially put in front of the president by the new Republican Congress.