PPACA Delay Means Employees May Head to Insurance Exchanges, John McGowan Tells NBC News

News / July 8, 2013

The Obama Administration’s decision to delay from 2014 to 2015 an Affordable Care Act rule requiring larger employers to provide health benefits continues to draw media attention.

According to, the Congressional Budget Office (CBO) estimated in May that employers would pay $10 billion in penalties in fiscal year 2015, which starts on Oct. 1, 2014. From 2014 to 2023, the CBO projected $140 billion in revenue from employer penalties, money that was supposed to help offset the law’s new costs of expanded Medicaid eligibility and tax credits to help the uninsured buy coverage. But the CBO may need to re-estimate.

Revenue from employer penalties will be missing for at least a year. And workers who might have been covered by an employer plan in 2014, but find their employer doesn’t offer coverage that meets Affordable Care Act standards will now be eligible to receive tax credits to buy their own coverage on the insurance exchanges, or electronic marketplaces, that are set to begin operating in January.

“More people are likely to go uninsured by employers, and many more of them may head to exchanges where they will be able to qualify for taxpayer-subsidized coverage, which could substantially increase the cost to taxpayers,” said Employee Benefits Partner John McGowan in the July 8 article (“Delay in employer penalties raises questions about budget forecast”).

In effect, at least temporarily, the design of Obamacare has changed. “Take this piece of the Swiss watch out and you know it isn’t going to be the same,” McGowan said.

He added workers especially with any kind of chronic condition, or who have children, now have every reason to go the exchanges.

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