The Obama Administration is postponing a much-touted provision of the new healthcare law which bars employers from providing better benefits to top executives than to other employees, reports the New York Times.
Internal Revenue Service officials told the Times that they would not enforce the provision this year because they had yet to issue regulations for employers to follow.
Adopted nearly four years ago, the Affordable Care Act says employer-sponsored health plans cannot discriminate “in favor of highly compensated individuals” with respect to either eligibility or benefits. The law allows for a substantial tax break for employer-sponsored insurance, and lawmakers said employers should not provide more generous coverage to a select group of high-paid employees. Reaching that goal, however, has proved difficult.
The I.R.S. told the Times that they were wrestling with complicated factors like how to measure the value of employee health benefits, how to define “highly compensated” and what exactly constitutes discrimination.
Bruce I. Friedland, a spokesperson for the I.R.S., told the Times that employers would not have to comply until the agency issued regulations or other guidance.
President Barack Obama signed the health care law in March 2010. The ban on discriminatory health benefits was supposed to take effect six months later, but Administration officials reportedly said then that they needed more time to develop rules.
A law banning similar discrimination was adopted more than 30 years ago for employers who serve as their own insurers. Now it extends to employers who buy insurance from companies like Aetna, Cigna, Humana and WellPoint, or from local Blue Cross and Blue Shield plans, the Times reports.
“Under the Affordable Care Act, for the first time, all group health plans will be prohibited from offering coverage only to their highest-paid employees,” Erin Donar, a Treasury spokesperson, told the Times. “The Departments of Health and Human Services, Labor and the Treasury are working on rules that will implement this requirement.”
The equal coverage delay is the latest in series of extensions to hit the rollout of Obamacare, which is sure to become an issue during mid-term elections.
The White House has delayed a requirement that larger employers offer coverage to full-time employees and delayed online enrollment in the federal insurance exchange for small businesses. It waived major provisions of the 2010 health law so consumers could renew policies that would otherwise have been canceled or terminated because they did not meet the law’s coverage requirements.
Additionally, the administration announced that people with canceled insurance policies could obtain hardship exemptions shielding them from tax penalties if they went uncovered this year.
A thorny issue confronting the I.R.S. is whether an employer is in violation of the law if it offers the same health insurance to all employees but large numbers of low-paid workers turn down the offer and instead obtain coverage from other sources, like a health insurance exchange, the Times reports.