Can This Be Any More Complicated?

May 27, 2010

I’m reading now that companies are supposed to provide their employees health insurance that costs them less than 9.5% of their adjusted gross family income. If they are paying above that, then the employer pays a penalty for not making it affordable to them. Okay then… I have a couple questions: As employers, do you have any idea what your employee’s family income is? Does that seem odd to anyone else?

It is starting to appear to me that if you have fewer than 50 employees, you have less of an obligation to meet government mandates. I’m not sure why, but it does seem that 50 is the tipping point for most of the onerous reporting and penalties.

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

The triggering mechanism for employer-paid penalties comes if the employee requests a subsidy via his or her tax return. Under the law, employers cannot dismiss or discriminate against employees because they are receiving subsidies.

And, my favorite solution from the new health care bill is this one: To avoid the penalty for unaffordable coverage, employers could respond in several ways. They could 1) increase their contributions to premiums, 2) reduce the workers’ share of premiums but recoup the money in other ways — for example, by increasing co-payments or deductibles, or 3) offer lower-cost health plans with less-generous coverage. Now, why didn’t someone think of that sooner?

Somebody needs to help me understand how this is helping our small business owners. Make sure you talk with HR professionals and understand what takes effect now or three years from now and how it might affect your bottom line.

Member Access