This week the White House announced that it was delaying by one year implementation of the “Obamacare” employer mandate. The mandate will now go into effect on January 1, 2015 instead of 2014.
This delay means nothing to the vast majority of Americans, including those in the real estate industry.
The employer mandate requires that employers with more than 50 full-time or full-time equivalent employees provide minimum health care coverage to their employees, or pay a fine of $2,000 per employee minus the first 30 employees.
Employers in that group now have until 2015 to comply. In practical terms this means little, since 94 percent of those employers already provide their employees with health coverage.
It’s been estimated that only about 12,000 of employers in this group, who have between 1 million and 1.5 million workers on their payrolls, fail to offer their employees health insurance and would be subject to the penalty. Many of these workers are employed in the retail and restaurant industries.
The vast majority of American businesses — 96 percent — have fewer than 50 employees and have never been subject to the employer mandate. This includes most real estate businesses.
However, if they do elect to provide their employees with health coverage, they can qualify for generous tax credits. This is unaffected by the delay in implementation of the employer mandate.
Obamacare also includes an individual mandate: Subject to exceptions for lower-income people, all individuals are require to have minimum health coverage by Jan.1, 2014, or be required to pay a penalty (officially called a “shared responsibility payment”).
The individual mandate also remains unchanged by the delay of the employer mandate. The penalty will be phased in over the next few years. For 2014, the penalty is only $95.
Starting on Oct. 1, individuals who don’t have other coverage (including those who work for larger employers) will be able to purchase coverage through state insurance exchanges. This is the heart of Obamacare.
Such coverage cannot be denied due to a pre-existing condition, nor can premiums be based on an individual’s health history. Moreover, lower-income individuals will be able to obtain tax credits to help pay for their coverage.
Individuals and families earning up to four times the federal poverty level will qualify for these credits. That amounts to about $45,000 for an individual, and $94,000 for a family of four.
The employer mandate has received a lot of attention, but it is one of the less important elements of the complex Obamacare legislation.
Implementing it turned out to be quite complex. The yearlong delay should give employers and the IRS time to straighten things out. In the meantime, Obamacare’s implementation in 2014 goes ahead.
Stephen Fishman is a tax expert, attorney and author who has published 18 books, including “Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants,” “Deduct It,” “Working as an Independent Contractor,” and “Working with Independent Contractors.