White House offers two-year Obamacare reprieve for mid-size employers

WASHINGTON (Reuters) - The U.S. government on Monday delayed another part of President Barack Obama's signature health reform law, saying medium-sized businesses would not face a tax penalty until 2016 for not providing employees with health coverage.

The announcement came after the administration last July delayed until 2015 the so-called employer mandate associated with the Affordable Care Act, commonly known as Obamacare.

The additional delay will provide further fuel to Republican critics, who have argued that Obamacare is an unnecessary expansion of the federal government that will harm the economy.

Obamacare aims to extend health coverage to millions of uninsured Americans, partly by imposing penalties on individuals and businesses not seeking coverage. Most individuals face a tax penalty for not having healthcare coverage in 2014.

In final regulations released on Monday, businesses with between 50 and 99 employees that are not already offering coverage will not face a penalty until 2016.

For businesses with 100 or more employees, the final rules reduce to 70 percent the number of full-time workers to whom an employer must offer coverage in 2015. Businesses are required to offer coverage to 95 percent of their employees in 2016 and beyond.

The rules finalize draft proposals issued in December 2012 and took into consideration comments from businesses and members of Congress, the Treasury Department said.

The rules clarify that government volunteers, such as firefighters and emergency responders, are not considered full-time employees - an uncertainty that worried state and local governments.

Teachers and other education employees will not be treated as part-time for the year even though their schools are closed or their work hours are limited in the summer, the rules said.

Additional safe harbors in the rules aim to make it easier for businesses to determine whether the coverage they offer is affordable to employees.

(Reporting by Patrick Temple-West; Editing by Peter Cooney)

[Image via Agence France-Presse]