In a surprise development, the Obama administration delayed the employer-mandated “play or pay” penalty under health care reform. Companies with 50 or more employees now have an extra year- until 2015- to provide affordable health care to all workers or face a penalty.
Health care reform requires employers with more than 50 full-time-equivalent employees to offer their employees (and dependents) meaningful health coverage that meets certain affordability requirements. If such coverage is not offered and if an employee purchases subsidized health coverage through a state-based Exchange Marketplace, the employer is subject to a penalty, which could accumulate to a potentially large amount.
The delay of the play-or-pay penalty on employers does not impact the requirement for individuals to purchase health coverage beginning 2014. Starting next year, non-exempt individuals must have and maintain minimum essential health coverage or pay a penalty amount on their tax returns. This potential penalty starts at $95, or 1% of household income, whichever is higher, and goes up to $695 or 2.5% of household income starting in 2016.
More guidance on the delay is expected within the coming weeks.