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Employers Face Obama-Care ‘Penalties’

Buried in the ‘Money & Policy’ section of the New York Times:

Study Points to Health Law’s Penalties


May 23, 2010

WASHINGTON — About one-third of employers subject to major requirements of the new health care law may face tax penalties because they offer health insurance that could be considered unaffordable to some employees, a new study says

As they study the law, employers are discovering another provision that got much less attention. If a company offers coverage but requires any full-time employees to pay premiums that amount to more than 9.5 percent of their household income, the coverage is deemed unaffordable, and the employer may have to pay a penalty

The Mercer survey found that one-third of employers had some workers for whom coverage might be “unaffordable,” meaning that the workers’ share of premiums — in the absence of federal assistance — would consume more than 9.5 percent of their household income.

Employers with fewer than 50 employees are generally exempt from penalties

Tracy Watts, a partner in Mercer’s Washington office, said it would be difficult for employers to know in advance exactly how many workers might find their health plans unaffordable.

“Employers rarely have access to information on their employees’ household income,” which may include the earnings of a spouse or children, interest from savings accounts and dividend income from stocks and mutual funds, Ms. Watts said.

So, in the end, more employers are going to be penalized for offering health insurance plans that are “unaffordable” for their employees – primarily because they don’t know how much money their employees have.

If an employer’s health plan is deemed unaffordable, the worker may qualify for a federal tax credit, or subsidy, to buy coverage in a new state-based marketplace known as an insurance exchange. A person claiming a credit must disclose income information to the exchange. The exchange will then notify employers if any of their workers qualify for subsidies.

Democrats say the subsidies will be a boon to low-wage workers. But the subsidies can also lead to monetary penalties for employers.

An employer offering unaffordable coverage is subject to a penalty of $3,000 a year for each full-time employee who gets government assistance to buy insurance in an exchange. The maximum penalty is $2,000 times the total number of full-time employees in excess of 30.

Andy R. Anderson, an expert on employee benefits at the law firm Morgan Lewis, said, “A lot of employers, particularly those with low-wage work forces, will run into difficulty with the affordability requirement.”

Retailers and restaurants with large numbers of low-wage workers may be most affected.

Michael C. Gibbons, chairman of the National Restaurant Association, said, “The cost of health care reform will be devastating to our industry.”

In deciding whether insurance is unaffordable, Ms. Umland said, it is not entirely clear whether the government will look at the cost of coverage for an employee alone or the cost of family coverage, which is usually higher. The government plans to issue regulations to explain what happens when a worker can afford individual but not family coverage.

To avoid the penalty for unaffordable coverage, employers could respond in several ways. They could increase their contributions to premiums. They could reduce the workers’ share of premiums but recoup the money in other ways — for example, by increasing co-payments or deductibles. They could offer lower-cost health plans, with less generous coverage.

Or they could charge lower premiums to workers with lower wages. Employers now often charge the same amount to all employees in the same health plan, regardless of their wages.

Employers are obliged to offer affordable coverage to full-time workers, defined as those who work at least 30 hours a week, on average.

Remember, during the campaign, Mr. Obama pledged that he would never impose ‘employer mandated health insurance’ like Hillarycare did. Never.

If an employer with 50 full-time employees offers coverage and 10 of those workers receive premium credits, or subsidies, the employer would face a penalty of $30,000. If 30 workers receive subsidies, the penalty would be $40,000.

Under the law, employers cannot dismiss or discriminate against employees because they are receiving subsidies

So, as was always the ultimate plan, more employers will stop offering insurance benefits at all. They will simply pay the $3,000 per head fine (tax) to the federal government.

Which, of course, is a ‘win-win’ for the Democrats, who after all, want to destroy the insurance industry and force more people into the government system. This is what Mr. Obama meant when he said back in March 2007:

I don’t think we’re going to be able to eliminate employer coverage immediately. There’s going to be potentially some transition process.

These details aside, notice how practically everyday there is a new revelations about the ‘unforeseen’ shortcomings of Obama-care. Isn’t it wonderful that it was rushed through in the dead of night on Christmas Eve. (Which, lest we forget, was the real vote.)

Still, try to imagine if we had a real news media. One that would find out such things before it was too late to do anything about them.

Just dreaming, of course.

This article was posted by Steve on Monday, May 24th, 2010. Comments are currently closed.

6 Responses to “Employers Face Obama-Care ‘Penalties’”

  1. Liberals Demise says:

    I guess this means that shovel ready jobs are now off the table, huh?

    “Oh, my hernia”

  2. Rusty Shackleford says:

    Yes, chalk one up for the mainstream media. Then, be prepared to watch your health insurance disappear and since there IS no “government plan” and won’t be for many years to come, many (most?) Americans will be without health insurance at all. Fines or no fines.

    The company I work for I know is salivating over this very option and working the numbers day and night to see how it will save them millions. Certainly it’s the fast-track to third-world-ism.

    You know, I spent many years in the military, paid for my college education myself and during those college years, and many when I was unemployed, I had no health insurance. When I was diagnosed with diabetes, I was fortunate enough to get hired by a company that had health insurance. However, I pay for my prescriptions myself (don’t have to) and go to the doctor (specialist) every six months. I do NOT go to the doctor for every little thing.

    The “government plan” like all government plans will suck out loud, and will only achieve equality in the sense that medical care and availability will suck universally for all people. Doctors have already stated flat out they will close up shop. Costs will force them out…and perhaps that’s in keeping with the boy’s plan. After all, all that education and residency and the long hours and work only result in a greedy physician, of course. (So we are led to believe by the likes of Brian Williams, Katherine Anne “Katie” Couric, and the whole “ain’t communism great” news crowd.)

    In short, I’m in my late forties, have worked to put myself in a position of some security and a career path that suits me. Now, as I flippantly imagined some 20 years ago, my worst nightmares are coming true. Hippies have taken over the country and deem it necessary to inflict their dystopia on all the evil, greedy (pronounced hard working and self-sufficient) masses.

    How more wrong can it be to have the GOVERNMENT meddle in things which are none of their affair. I have done all I can do….worked, got educated, protected myself and now I’m to be punished for it all because of some skewed, morbidly warped viewpoint that I’m a bad person for working my life inside of capitalism.

    This, my friends, does indeed spur violent emotions. I would prefer to denounce this brown clown legally and fairly and hope desperately that November helps show this crackpot how it’s really gonna be. Aside from that, if he even remotely remains in power, I seriously doubt on retaining my citizenship. As a diabetic, I would be a drain on society and they would want to know what I eat, when, how much, with whom and if I get any exercise and follow the GOVERNMENT regimen for proper health.

    I do not cotton well to being under a microscope. Most likely I would be denied care because I refuse to follow their plan…then I would DIE.

    Why must we now hear of these things in the plan? over 1,000 pages and nobody was allowed to look at it? Even the crackpots on the left only knew of their little piece of the legislative carnage. Acting like misguided (and not a little bit arrogant) parents, they are going to tell the “child” (us) to “do as we’re told while they look into our bank accounts, our personal lives and habits. If that isn’t a revisitation of the Gestapo, then what is? Total control, all the time.

    If/when that comes about, I cannot say how I will react. I’m thinking that most likely, it won’t bode very well for me.

    Naturally, my concern extends beyond my own worries and to my own kids, one of whom is ALSO diabetic. And, then…to friends as well and not just those who have health problems.

    No, this is not a “fix” to the healthcare system. This is a monumental excuse to usurp individual rights and control the masses. This is why it must be the FIRST item on the agenda of a republican president to rescind. We cannot let this legislation stand…it must never be allowed to bloom and propagate into our society. It was predicted that the bad elements of the bill would appear only after most of it went into effect but it is slowly coming into the light much sooner. This is good, though it SHOULD have been vetted long before the stealth vote last year.

    And, it goes without saying that the people who constructed this “law” are criminals, thugs, extortionists, thieves, and the vilest of the vile. Still, their exact motive is unclear to me, though I am very strongly of the opinion that they want control over all of us. It is a bloodless coup taking place and either the GOP is gobsmacked into a frozen stance, or they are waiting for their turn at bat…something the democrats are bound and determined to prevent from happening.

    McCain made the monumental error of continuing to reach to the “center” to appease the left, thinking they would play nice. Nope. But it’s like I said to a friend, when your neighbor backs over your mailbox and says nothing…you can overlook it one time. The next time it happens, you tell them you object and demand repairs/payment. If it happens a third time, you simply wreck theirs. A fourth? Time to take serious action if the authorities do not.

    And we are in a crossroads….I foolishly had hoped that the GOP would act in the stead of the authorities but rather, like everyone else who’s rights are now at the brink of dissolution, we are helpless. There is the Tea Party movement…but I do not know how much horsepower it can gain by 2012. I hope it becomes a force to reckon with. But then, how much damage will the obamachine do by that time? And how about all their little “time-bombs” passing legislation that will only take effect well after an election and most likely a calculated tactic so that even if we have a republican president, house and senate, the “bomb” will go off in the middle of that.

    Oh they are lining up their ducks…and sadly…they play long term better than the GOP. They are like the terrorists who wait and then strike when the opportunity arrives. The GOP has no ability to see the potential for disaster, instead hailing the respect toward “their esteemed colleagues” as if they were going to sit down and have a mature discussion.

    Nope the time for the gloves to come off was actually years ago when the democrats showed their true colors at Nixon and at Reagan.

    There’s an old expression from Brooklyn….”You have to play their game better than they do”. But who on the GOP side, or any up-and-comer will or can? Gingrich, maybe. Cheney definitely but he’s been so demonized he may never be heard from again in the form of an active political force. That’s a shame because we need people like him to stave off the sophomoric political maneuvering that takes place.

    No, I don’t want a GOP version of what the democrats are doing. I want our side to “play that game better than they do” cleanly, effectively and lawfully. THAT…is what FAIR is. Not “making the rules up as we go along”.

    Sadly, I feel like a passenger on that bus that will explode if it slows down. I don’t like this ride..and I especially don’t like it because it’s run by radical leftists who actually believe they know better and that they are doing “what’s necessary” and yet cannot identify the harm they are doing. All simply because they firmly believe that our basis of government is unfair, that laws are therefore ALL unfair…etc etc. It’s nothing more than the hippies, once again, refusing to assimilate into a normal culture and instead re-shaping culture to adapt to them.

    I guess in one respect, I have to hand it to them. They are better at that than the conservatives are at keeping the fences up that hold our values in. Not that I want to join them. They simply have no scruples so it’s easy for them to write the music while the band plays.

    Nonetheless I am saddened and frightened. For me, for my family, my friends, the nation, our military, and on and on. This is what they want…to dismantle every good thing this nation is or ever was. A tantrum of epic proportions.

    And I do believe still that they are the hippies who never grew up…and that’s simply because they never wanted to.

    • proreason says:

      Rubio, Christie, and for those who don’t hate him, Gingrich.

      Pawlenty, maybe. Mitch Daniels, maybe.

      The first three are the ones who can articulate what needs to be done and have the guts to do it. Christie is coming on strong. Don’t forget that Rubio has been the speaker of the Florida State Legislature, a position at least equivalent to a US congressman.

      The last two have potential.

      I would put Liz Cheney in the group, but her lack of elected experience hurts her. Rick Perry is interesting but he has a lot of baggage and being from Texas may not help him, if he’s even interested.

      The way it stands at the moment, Christie / Rubio might be the best ticket. Relative inexperience is probably a plus in 2012.

      But first, 2010 is a MUST WIN. If that doesn’t happen, a lot of people will be leaving the country or at least going Gault.

    • Right of the People says:


      Time are indeed dark my friend.

      One of your comments made me realize the Democrats and the Muslims are very much alike. You can’t bargain with them. Their idea of compromise is giving them what they want no matter what. Your point of view does not matter to them, they are single-minded in achieving their goals and the ends ALWAYS justify the means regardless of the consequences.

      We must keep this in mind when we attempt to deal with them both.

  3. proreason says:

    Not going to Harvard is a big plus for this guy.

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