Let's face it. Monday's announcement by the federal government that another part of Obamacare has been delayed probably shocked few, if any, Americans.
The Obama administration's decision to push back the mandate for some employers to provide health insurance for workers was the second time the component of the health reform legislation has been delayed. And it added to a long line of other delays. Here's what this latest postponement could mean for you.
Source: WhiteHouse.gov.
Impact on workers and small businesses
If you're one of the 7.8 million Americans who work for an organization with between 50 and 100 employees, you may not be getting employer-based coverage anytime soon. Last summer, the feds quietly announced the employer mandate would be delayed until 2015. For employers with 50 to 100 employees, that deadline has now been extended until 2016.
Practically speaking, this means that if you have already found individual insurance to cover you this year, you'll probably want to plan on keeping it for a couple of years. If you're taking a pass on purchasing health insurance, remember there is a tax penalty you could be stuck paying in April of next year.
This advice could also apply to you even if you work for an organization with more than 100 employees. In an interesting twist, the U.S. Treasury Department lowered the number of workers that must be offered insurance by larger organizations from 95% to 70% for 2015. The threshold rises to 95% in 2016.
There is some good news. First, many Americans working for larger employers won't be affected by this delay at all. Most of these organizations already offer health coverage to workers.
Second, any chances that your employer could cut your position to get under the 100-worker threshold will likely be lessened. That's because the Treasury Department implemented a provision that requires any organization claiming the extra year of exemption from the employer mandate to certify, under penalty of perjury, that it didn't reduce its employee head count just to avoid the mandate.
Potential impact on investments
Obviously, if you own a company that gains more time to provide health coverage for workers, you win with the latest delay. Your employees might not be as happy, though. From an investing standpoint, possible winners include health insurance companies participating in the Obamacare exchanges. The employer mandate delay and other associated regulatory changes could drive more employees to buy insurance online.
WellPoint (WLP +0.75%) stands out as a potential beneficiary if this happens. The nation's second-largest insurer opted to participate in the Obamacare exchanges for all 14 states in which it operates. WellPoint could reap the rewards of higher enrollment from workers looking for individual insurance to avoid having to pay those escalating tax penalties.
Shareholders of hospital stocks, on the other hand, could shed a few tears over yet another delay. Last July, the first postponement of the employer mandate sent shares of Health Management Associates, now part of Community Health Systems, and Tenet Healthcare (THC 1.10%) down more than 4% the day after the announcement.
Things might not be so bad this time around for Community Health Systems and Tenet, though, because of a delay that has nothing to do with Obamacare. The Centers for Medicare and Medicaid Services, or CMS, announced a couple of weeks ago that it is pushing back enforcement of the "two-midnight rule" until after September 30. This rule impacts Medicare reimbursement for short-term hospital stays. The delay should help the bottom lines of the major hospital chains.
