Tom explained to me how the fines under the Affordable Care Act work, and what it means to people and businesses. I found it educational and enlightening, and think everyone should be educated. - Rob Here's Tom's Blog:
OBAMACARE FINES EXPLAINED
The rollout of the President’s healthcare law, affectionately dubbed “Obamacare” by its detractors, will begin next year; but the full effects and benefits of the law will not be realized for many more years to come. There’s so much misinformation out there, and the law is so voluminous and so complex, that it’s difficult to sift through and make sense out of it all. What is true is that beginning next year, businesses that employ more than 50 employees that work at least 30 hours per week will have to provide health insurance or be subject to paying a penalty (called a “mandate” by the politicians). Likewise, individuals that are employed, but do not have health insurance through their employer, will be responsible for finding their own health insurance policy or be subject to paying a mandate.
You can sure bet that there are employers out there that are already “doing the math,” and deciding whether it will be more beneficial to them to just pay the fine rather than provide health insurance coverage for their employees. So here’s a really quick primer on the fines.
Beginning in 2014, individuals WITHOUT health insurance will be subject to paying a fine of $95 per adult, up to a maximum of $285 per household or 1% of a families’ total household income, whichever is greater.
In 2015, individuals WITHOUT health insurance coverage will be subject to paying a fine of $325 per adult, $162.50 per child, with caps of $975 and 2%, whichever is greater.
In 2016, individuals WITHOUT health insurance coverage will be subject to paying a fine of $695 per adult, $345.50 per child, with caps of $2,085 and 2.5%, whichever is greater.
The mandate would be paid in installments over a 12 month period. Households that fall below the IRS poverty thresholds of $10,000 per individual and $23,050 for a household of four will NOT be subject to paying the fine.
As stated above, Obamacare requires that employers with 50 or more workers must provide health insurance for employees who work at least 30 hours per week. The fine for not doing so will be $2,000 per worker with an exemption for the first 30 employees. Doing the math, this means 20 employees times $2,000 per worker equals a fine of $40,000 levied on the employer.
Let’s say that an employer complies with the law and offers a health insurance benefit, but the premiums are just too expensive for the employee to pay (defined as more than 9.5% of the employee’s pay). In this scenario, the employer will also be subject to paying a fine. Here’s how it will work: the employee will receive a tax credit to help pay for the premiums; the tax credit will be funded by a fine levied on the employer of $3,000 per subsidized worker. So, you begin to see the wheels turning in the heads of employers as some of them will begin to figure out ways to scam the system: $2,000 per employee versus $3,000 per subsidized employee.
Just a few years ago, the architectural firm that I (Tom) worked for was paying on average, $14,000 per employee for basic health care coverage. That figure represents a significant expense to a company. You can begin to see the tremendous cost benefit to an employer’s bottom line to STOP offering health insurance and just pay the fine. The downside to this decision will be that a significant number of individuals will be forced out into the market place to figure out very complex policies for themselves - policies that were previously analyzed by well qualified human resources personnel.
We’ve been going to the Hair Cuttery in Crofton for several years now, and have befriended a couple of the hair stylists that work there. Last weekend, Maggie (not her real name) was telling me that her employer has decided to comply with the new healthcare law and begin to provide health insurance for employees that work more than 30 hours per week. Here are a couple of the policy’s provisions: $20 per doctor visit up to 6 doctor visits per year, and $200 towards any hospital visit up to 1 visit per year.
Somehow, I have to wonder if all this is what the President really had in mind.