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.
INDIVIDUALS
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.
EMPLOYERS
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.
