A new IRS rule released this month will prevent employers from "dumping" employees onto the Obamacare insurance exchanges, while severely limiting how companies fund insurance as an employee benefit.

No doubt the administration saw the writing on the wall and is moving quickly to prevent a catatsrophe as it became possilbe that millions of employees would have their insurance benefit terminated, forcing them to seek coverage on the exchanges.

Obamacare requires that companies of over 50 employees offer insurance or pay a fine. That fine has been increased considerably - $100 dollars a day for each employee not coivered, up to $36,500 a year.

New York Times:

Under a central provision of the health care law, larger employers are required to offer health coverage to full-time workers, or else the employers may be subject to penalties.

Many employers — some that now offer coverage and some that do not — had concluded that it would be cheaper to provide each employee with a lump sum of money to buy insurance on an exchange, instead of providing coverage directly.

But the Obama administration raised objections, contained in an authoritative question-and-answer document released by the Internal Revenue Service, in consultation with other agencies.

The health law, known as the Affordable Care Act, builds on the current system of employer-based health insurance. The administration, like many in Congress, wants employers to continue to provide coverage to workers and their families.

“I don’t think that an employer-based system is going to be, or should be, replaced anytime soon,” President Obama said recently, when asked if the law might speed the erosion of employer-sponsored insurance.

When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the Internal Revenue Service said employers could not meet their obligations under the health care law by simply reimbursing employees for some or all of their premium costs.

Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”

If an employer wants to help employees buy insurance on their own, Mr. Condeluci said, it can give them higher pay, in the form of taxable wages. But in such cases, he said, the employer and the employee would owe payroll taxes on those wages, and the change could be viewed by workers as reducing a valuable benefit.

If Congress wanted to tie employers to group health plans, they wouldn't have given companies the choice of opting out of paying for employees' insurance and accepting a fine for each worker not covered. Now, there is no option. The fine, as one insurance consultant says, is "unusually punitive." This is SOP for an administration that continues to shove Obamacare down the throats of businesses and employees while working frantically to mitigate some of the more draconian effects of the law to prevent a total Democratic collapse at the polls in November.

The only alternative for many thousands of businesses may be bankruptcy - or a forced sale. This is especially true for small businesses at or near the 50 employee threshold. With the small business insurance exchange delayed by administration incompetence, the insurance plans available are going to be too expensive for many companies to bear.

Meanwhile, insurance companies are guaranteed to make money thanks to the American taxpayer who is bailing out these milti-billion dollar entities who hitched their star to Obamacare and are being rewarded for keeping premium increases down with bribes.