Every time the administration delays an Obamacare rule, it makes two concessions. One, the law is indeed bad for many businesses and can lead to bureaucratic morass and stagnation in an already slow jobs economy. Two, businesses are more important than little ol’ you, individual taxpayer, who will get no waiver or reprieve from Obamacare’s mandate. You’ll either pay the penalty for not having coverage or if you did sign up for an Obamacare plan and didn’t renew properly, change your plan properly, or estimate your income properly, you’ll be subject to literally paying for those mistakes at tax time.
There will be many people like Janice Riddles, profiled by CNN, out there, many of whom did nothing more than make good-faith attempts to predict the future and failed. No matter how much momentary schadenfreude you may choose to indulge in over someone in this particular predicament, especially if they were passionate supporters of the law, we can all agree this is a shoddy way of doing business putting yet another unfairly complicated burden on Americans on April 15. Beware the clawback:
The Los Angeles resident had applied for Obamacare in late 2013, when she was unemployed. She qualified for a hefty subsidy of $470 a month, leaving her with a monthly premium of $1 for the cheapest plan available.
Riddle landed a job in early 2014 at a life insurance agency, but since her new employer didn’t offer health benefits, she kept her Obamacare plan. However, she didn’t update her income with the California exchange, which she acknowledges was her mistake.
Now, she has to pay back the entire subsidy, which is forcing her to dip into her savings.
“I was blindsided that the subsidy has to be paid back,” said Riddle, adding she didn’t even use the coverage, which she had until she qualified for Medicare in October. “I’m in shock…but I have no choice. Do I want to argue with the IRS or the Obama administration?”
But back to small businesses, some of which will get a brief reprieve, until July at least, to comply with part of the law. Because you know how helpful it is to have to make business plans on tight margins in five-month intervals, according to capricious administration decisions about a law no one understands. The businesses are understandably asking for more permanent solutions to the shoddy “solution” the Obama administration has offered for the health care system.
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.
Yet another concession.