No Penalties for Employers Not Offering Dependent Coverage: Employer Group

By Jerry Geisel

Aug. 28, 2012

An employer benefits lobbying group has urged the Obama administration to make it clear that the health care reform law does not impose financial penalties on employers that do not offer coverage to dependents.

Under the Patient Protection and Affordable Care Act, employers are to be assessed $2,000 per full-time employee if they do not offer coverage to employees in 2014.

Regulators have yet to issue definitive guidance on the penalty. In the absence of such guidance, the ERISA Industry Committee said it is concerned that regulators might interpret the law as imposing the penalty on employers that do not offer dependent coverage.

“This interpretation is not consistent with the statute as a whole,” Scott Macey, ERISA Industry president and CEO, and Gretchen Young, senior vice president-health policy, wrote in a letter sent Tuesday to Jeanne Lambrew, deputy assistant to the president for health policy.

While the law’s shared financial responsibility provisions “refer to health coverage for full-time employees and their dependents, the penalties are based solely on the number of an employer’s full-time employees—dependents do not enter into the penalty calculation,” executives of the Washington-based group said in the letter.

“If Congress had intended to create a dramatic new mandate that penalized employers for failing to offer dependent coverage, Congress would have done so much more directly than the statute achieves with its parenthetical reference to dependents,” they said in the letter.

In fact, the benefits lobbying group said, the reference to dependents in the shared responsibility provisions of the health care reform law was simply a “drafting error” that regulators now should correct.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email

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Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management.

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