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CA Passes Law That Exempts Businesses from Mandates Until 2016

A Picture of Alex Hitcherson Alex Hitcherson
07/12/2014

California Governor Jerry Brown signed a bill on July 7, 2014 that excused small businesses in California from complying with the employer mandate requirements under the Affordable Care Act for another year, until 2016.

Under the original version of the Affordable Care Act, President Obama wanted the employer mandates to take effect in 2014. That deadline was pushed back until 2015 due to all of the other technical and implementation issues revolving around the Individual Mandate. Now, Governor Brown has decided to allow businesses with fewer than 50 employees, who already offer those employees health insurance that may or may not comply with the requirements of Obamacare, to be grandfathered in and essentially avoid any penalty or repercussions of not complying with the law, until December 2016. The reason that a policy presently offered by a employer may be deemed not compliant with the law would be if it did not offer the ten essential benefits mandated under Obamacare.

The reason behind SB 1446 according to Dave Jones, the California Insurance Commissioner, is that small business owners need more time to transition into the requirements mandated by the Affordable Care Act and the new bill will give them another year to make the transition without disrupting business.

The State of California implements and manages the requirements of the Affordable Care Act on its own and does not rely on the federal Marketplace to offer insurance to its citizens. Under the federal Marketplace, small business owners can shop for health coverage for their full-time employees, so long as they have 50 or fewer full-time employees, on a marketplace called SHOP (Small Business Health Options Program). The SHOP marketplace is available to small business owners on Healthcare.gov starting in the 2015 enrollment season and the small business employer mandates go into effect during the 2015 enrollment season.

California will have a similar type of marketplace for small business owners to shop for insurance for their employees and it is contemplated that the additional year, which allows small business owners time to transition to the new mandates under the law, will also give California more time to prepare their SHOP marketplace.

Under the bill, any employer who purchased their insurance policy for their employees before December 31, 2013 will already be grandfathered in and will be allowed to push back compliance with the employer mandates until 2016 and any employer who purchased the policy after December 31, 2013 will also be given the extended deadline.

Senator Mark DeSaulnier (D-CA) added his comments regarding the new bill in the news release regarding SB 1446 and said, “As a former small business owner, and strong supporter of Obamacare, I would like to thank Governor Brown for signing this important legislation to help small businesses adapt to new components of healthcare reform. Commissioner Jones has been key in working to ensure the successful long-term implementation of the Affordable Care Act. SB 1446 will continue California’s commitment to health care reform.”

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