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Business leaders laud delay of penalty

Thursday, July 4, 2013, 12:01 a.m.

Business leaders expressed relief on Wednesday that the Obama administration won't penalize companies with 50 or more employees for not offering health insurance next year.

“The reaction is: ‘At least we can breathe right now,' ” said James McTiernan, a health care consultant with Triad Gallagher, a Downtown benefits advising firm.

McTiernan said clients in retail and hospitality industries — employers with large part-time workforces that expected to be most affected by penalties — began calling him upon hearing the announcement on Tuesday.

The important component of the Patient Protection and Affordable Care Act, President Obama's signature health care reform, is delayed until 2015. Companies would have incurred penalties starting on Jan. 1 if they did not offer affordable health insurance to workers.

The delay does not change the individual mandate, which requires all Americans without insurance from an employer to buy it themselves starting Jan. 1.

Businesses with 49 or fewer workers continue to be exempt from the mandate and fines.

“Ninety-six percent of businesses in this country have fewer than 50 employees,” said Terry Gardiner, vice president of policy and strategy for advocacy group Small Business Majority. “Only the 4 percent of larger employers that do not offer health insurance will be impacted by the delay in the penalty.”

Most companies that offer health coverage are expected to continue the practice, said Tom Tomczyk, a health care consultant with Buck Consultants, Downtown.

“Most larger employers were offering coverage that was affordable,” he said. But companies with many part-time workers, such as restaurants, hotels and retail chains, that did not give employees insurance had expected to take a major financial hit.

Now it appears the law will absorb a significant cost, Tomczyk said. The penalties were expected to generate $10 billion to fund implementation of the law in 2014, according to a Congressional Budget Office estimate.

“They're going be losing $10 billion, if the CBO is correct,” he said. “That's going to have to have be made up somewhere.”

Business groups had complained since the law passed in 2010 that the provision was too complicated. For example, it redefined full-time workers as those who put in 30 hours or more in a week. It included two requirements, one to provide coverage and another that it be deemed “affordable” under the law. Violations of either exposed employers to fines.

“It's a step in the right direction because they need to shelve this whole thing and start over,” said Deb Doucette, secretary-treasurer of Pittsburgh restaurant company PIPA Group.

The company, which owns the Clark Bar and Grill in the North Side, Caffe Amante in Downtown, and Bistecca Steakhouse and Wine Bar at The Meadows Racetrack & Casino, is just under the 50-employee threshold. But Doucette remains concerned that any changes in employment could push the company over the threshold and expose it to a raft of costs.

Companies that planned to offer health coverage said the delay is helpful.

Christine Whipple, executive director of Pittsburgh Business Group on Health, said many large companies her organization represents were unsure what reporting was expected in order to show compliance with the mandate.

“A big unknown is the internal costs to companies for complying,” Whipple said. “Hopefully, this one-year delay will provide the time employers need to assess their internal systems and make the adaptations needed to comply with the regulations.”

Senior White House adviser Valerie Jarrett cast the delay as an effort to clarify and simplify reporting requirements.

“We have and will continue to make changes as needed,” Jarrett wrote in a White House blog post. “In our ongoing discussions with businesses we have heard that you need the time to get this right. We are listening.”

The Associated Press contributed. Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or

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