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Companies Fire Workers To Avoid O-Care Tax

From CNN’s Money.Com:

Trying to duck health care’s employer rules? Don’t bother

By Jose Pagliery | July 13, 2012

NEW YORK (CNNMoney) — In the wake of the Supreme Court’s health care decision, several companies with 50 or more full-time workers have embarked on a quest.

Their aim: Get below 50 and dodge the employer mandate. The health reform law forces them to start providing insurance by 2014 or pay stiff penalties.

Kari DePhillips, who co-owns the Content Factory, a public relations firm in Pittsburgh, was hoping she could just break up the company to sidestep the rule. Maybe one firm would do marketing while the other builds websites.

The small company is on pace to exceed the 50-worker threshold in the next few years. DePhillips doesn’t want to provide health care, and she definitely doesn’t want to pay the penalty, which would be $2,000 per full-time worker minus the first 30.

"A $40,000 fine to my company would be catastrophic," she said.

The only problem with her break-up plan is that it won’t work. The government would still consider both of her companies as one. That’s because the employer mandate penalty relies on "controlled group" provisions, focusing on who controls the company — not necessarily what they do…

After hearing about the little-known rule, DePhillips took another stab at it: Start a second company that never existed as part of the first.

Again, resistance to the rule is futile. The penalty only looks at who owns part or all of the company

The other way business owners are planning to deal with the law is a devastating one. They plan to cut staff and switch full-time employees to part-time, which the law classifies as less than 30 hours per week.

That’s the reality for the 425 workers at David Barr’s nearly two dozen KFCs and Taco Bells across Alabama and Georgia. Barr has already done the math.

Apparently, they didn’t get an Obama waiver, being in a red state.

He currently provides health care for managerial staff only, and it costs him about $125,000 to cover the 30 who take it. Extending that to every full-timer would cost him another $545,782 a year...

To minimize expenses, he’ll fire workers and cut hours to reduce the number of full-timers to 60. Then he’ll opt for the penalty instead of paying insurance. A $60,000 fine pales in comparison to the huge potential rise in health care costs.

Cashiers would be replaced by self-order kiosks, cooks with chicken breading machines. These options are too expensive now, he said, but they would make sense then

And this one example is going to be repeated by the hundreds of thousands all across the country. — Do you see now how Obama-Care is going to do wonders for the economy?

This article was posted by Steve on Monday, July 16th, 2012. Comments are currently closed.

10 Responses to “Companies Fire Workers To Avoid O-Care Tax”

  1. Liberals Demise says:

    Who here in S & L didn’t see this coming? We are all part timers from here on out.
    Thanks Massa DingleBarry. Youse is too kind.

  2. untrainable says:

    Well, at least Obama can stop bitching about ATM machines as the evilest thing since the wheel. Now he can bitch about chicken breading machines taking jobs from flour flingers everywhere.

  3. Anonymoose says:

    The only “good” thing about this healthcare fiasco is coverage for pre-existing conditions–which supposedly will stop these nightmare stories of people being dropped from insurance coverage because their doctor found something that had started before coverage began–and that they may never have known about. However, I’m cynical enough to think it won’t work that well in practice.

    Everything–including this, is a nightmare happening. Employers are only supposed to give you work for something they want done, and compensate you with money. Retirement, insurance, everything else is a benefit to entice people to work there.

    But the benefits have become more costly and troublesome than paying people to work. Maybe that whole Cloward-Pliven is for real: wreck the economy completely, make employers unable to provide insurance and unwilling to hire, use that to further demonize them, and make everyone dependent on the government to save them.

    The trouble with Cloward-Piven is they assumed they could create a chaotic and unstable situation and still control the outcome.

    • njyankee says:

      “The only “good” thing about this healthcare fiasco is coverage for pre-existing conditions”

      This is one of the worst parts of the bill. If people with pre-existing conditions are allowed to get the same health care insurance as everyone else here’s what’s going to happen: on Monday they have no insurance, on Tuesday they get diagnosed with cancer, on Wednesday they go out and buy insurance, on Thursday the insurance company is on the hook for the thousands upon thousands of dollars in medical bills eventhough the person has only had a policy for 3 days. How long do you think insurance companies can last with this business model in place? Which is of course what the government has wanted all along. Granted, the whole point of this “mandate” is that the person is forced to have insurance on Monday, thereby negating the series of events, but I highly doubt that that’s how it’ll play out.

      Also, I have some questions that I always ask my liberal friends to point out the painfully obvious: “Can you give me one reason why the government would want to keep you alive after you’ve retired? Let’s say you’re 78, retired, collecting SS and were just diagnosed with cancer. It costs $X to cure you. It also costs the same $X to innoculate 100 newborns (otherwise known as future tax payers). What do you think the government is going to do?” I know most people here at S&L agree with me anyway, but feel free to use those questions the next time some liberal starts touting the greatness of socialized medicine.

    • Dupree says:

      njyankee – you hit the nail on the head. the mandate is supposed to force everyone to have uninterrupted coverage, but it won’t. do you know what the penalty, i’m sorry – tax, is for not having insurance? 2014 – greater of 1% of income or $95 annually. in 2016 this rises to the greater of 2.5% of income or $695 annually. What do you think people are going to do? pay a couple hundred dollars in taxes or a couple thousand dollars for coverage they can pick up at anytime.

      worst part is the worst free riders are completely exempt. Those under FPL are exempt from the individual mandate.

  4. Right of the People says:

    As my old first sergeant would have said: “This is a clusterf**k of the Nth magnitude.”

    I don’t think even Barry the Bungler had any inkling what this would do to the economy although I’m sure he’s happy as hell about it. If we can’t rid of this evil scheme we will crash and burn more quickly than Canada and the UK combined. It’s going to look like one of those movies from the late seventies, early eighties that were set in the future when everything is run by the guvmint.

    Is it too early to start drinking?

  5. Astravogel says:

    I have a good idea how the workers affected by this will vote in November.

  6. fallingpianos says:

    President Kardashian: “[A]s president, my job is to think about the workers. My job is to think about communities, where jobs have been outsourced.”

    What the True Believers haven’t figured out is that when you stick it to employers (a.k.a. “The Rich”), you stick it to the workers. The very people for whom the left supposedly advocate wind up getting stabbed in the back.

    Excrement rolls downhill. There’s no repealing the law of gravity.

  7. GetBackJack says:

    The company my (relative) works for has already moved everyone on the payroll from full-time to 20 hours per week. The people still employed have to accomplish the work they did in 38 hours in 20.

    This should end well.

    BTW – due to WorkFlow Management software (meaning, a computer program decides when you will be at work), and Obamacare you never know when your few hours on the job will be, and you have to have two and three mini-jobs to make up for what you lost when your your full time job went away (thanks to ObamaCare).

    But because Workflow Management software doesn’t care about when you have to be at the the other jobs, it’s constantly moving schedule means you don’t when to tell your second and theird employer when you can be at those jobs.

    Anyone see a problem developing?

    Of course not.

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