Tuesday, June 3, 2014

A Staggering $100 Per Day or $36,500 a Year – Per Employee - Obamacare Penalty for Business

By Yevgeniy Feyman

While the latest Obamacare regulation for employers may slip the radar of those outside the beltway, the new rule may have serious consequences for employers and employees, serving to double down on the worst parts of the health care law.

Arguably the two most well-known provisions of Obamacare are the widely unpopular individual mandate, and the health care exchanges. The former helps ensure adequate risk pools when insurers are required to sell expensive coverage to all regardless of health status, and the latter provides a somewhat centralized portal through which to funnel subsidies to those purchasing coverage. Still, these subsidies are expected to cost about $1 trillion through 2024 – and that means that you not only need some cash to pay for it, but you also need to restrict eligibility to protect taxpayers from ballooning costs. Under the hood, Obamacare’s official fiscal neutrality partly relies on a clever budget gimmick – the employer mandate.

Beginning in 2015, the law will require employers with 50 or more full-time equivalent workers to offer coverage to their full-timers, or else pay a penalty. The Congressional Budget Office projects that these penalties will amount to around $139 billion over 10 years – not nearly enough to offset the $1 trillion in subsidies, but still no small potatoes. But there’s a more important gimmick at play here – by requiring employers to provide insurance coverage, the number of people receiving subsidies is likely reduced quite a bit, making it that much easier to pay for the law. This makes it costly for employers to “dump” their workers onto the exchanges, while still ensuring that coverage numbers increase.

The new regulation issued by the IRS seek to further increase the cost of such “dumping.” The agency is now interpreting the law as prohibiting employers from giving workers a pre-tax fixed dollar amount to purchase coverage on the exchanges, an arrangement commonly known as an “employer payment plan.” The penalty for doing so is a staggering $100 per day or $36,500 a year – per employee.

So what does all this mean?

Read the rest here.

6 comments:

  1. First Quarter GDP Was Negative: Economy Headed For Deep Recession

    It may not seem like it if you have a well-paying job which covers most of your Obamacare costs and that enables you make your mortgage payment, pay the leases on your cars and enjoy discretionary spending, but for the 76% of the country that lives paycheck to paycheck the economy never really recovered from the Great Financial Collapse and is getting worse by the day. See this article, for example: CNNMoney.

    http://investmentresearchdynamics.com/first-quarter-gdp-was-negative-economy-headed-for-deep-recession/

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  2. As much as I hate this I'm kind of glad they are doing it. Dumping people onto the exchanges is the quickest path to single payer.

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    1. You're an idiot if you think single payer socialism is going to work.

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    2. Before government grabs health care to better control our lives there are other things to accomplish.

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  3. ...and to the subsequent collapse, Soviet-style. Bring it on! The sooner this socialist insanity is over, the better.

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  4. What does it mean? "Get big or get out". That's what it means. It's about forcing all the smaller (but not smallest) players out of all businesses in the USA. Many of these companies will go under or go up for sale to be purchased by larger corporations. It's fascism at its finest.

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