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Monday, April 15, 2013

ObamaCrapCare Costs Finally Coming To The Fore


Uh Oh, Obamacare Math Sinks In for Small Businesses

@cnbc on Twitter
"Just now, things are really sinking in that there is this employer responsibility," said Amanda Austin, of the National Federation of Independent Business.
Under ACA, often called Obamacare, employers with 50 or more full-time workers face a mandate to provide insurance. It's known formally as shared responsibility.
"You're going to need somebody to do a thorough review of the impact on your business," Austin said, because the new rules are complex.
H&R Block (HRB) has been reaching out to small businesses to help them begin preparing for the next two years. They've started with their own franchisees, many of whom hire large numbers of seasonal workers and often own more than one business.
"We put together a spreadsheet and walked them through a number of examples," said Kathy Pickering,Executive Director of H&R Block's Tax Institute.
"Once they looked at the calculations," she said, "that allayed a lot of concerns."
The IRS and Treasury are expected to finalize the shared responsibility rules in the next few weeks. Analysts don't expect too many changes from the interim guidelines, published earlier this year.
For small-business owners, there's a lot of new math to consider. Here are some of the key provisions:
The 50/30 Rule
There's no requirement to provide health care if you employ fewer than 50 people.
Shared responsibility requirements kick in if you are a business owner with 50 or more employees who work 30 hours or more per week. Thirty hours is considered full-time.
As a business owner, you also face shared responsibility if you employ the equivalent of 50 full-time employees-for example, a combination of 100 part-time employees who work 15 hours a week.
To make matters more complicated, right now the rule applies even when those workers are split across multiple businesses.
"One of the key questions that did surprise people is the aggregation rule. If you are an owner for several businesses," explains Kathy Pickering of H&R Block, "then all of those employees line up under you."
There are some exceptions for employers of seasonal workers who put in full-time hours.
Penalties: $2000 to $3000 Per Employee
As an employer with 50 or more full-time employees, technically, you only face a penalty if one of your employees receives a federal subsidy to buy insurance on a state health exchange.
If do not offer your employees health benefits, you'd be exempt for the first 30 workers, but face a penalty of $2000 a head for the others. For a firm of 50 employees, that would result in $40,000 in penalties.
While paying the penalty may appear cheaper than paying for health benefits, penalties are not tax deductible, which tax specialists could impact the total cost calculation.
As a business owner, you could still be charged a penalty even if you offer a health insurance. If your plan costs an employee more than 9.5% of his income, and the employee opts for a government subsidy on a health exchange, it will also trigger a fine. The penalty for each employee who receives a subsidy in that case is $3000.
New Obamacare Math
A recent ADP study found employees who earn less than $45,000 annually are more likely not to enroll in employer health plans, because of cost. Among employees who earn between $15,000 and $20,000 annually, only 37 percent opt to sign up employer health insurance.
As a small-business owner, this year you're going to want to spell out all of the tax consequences to your employees, if they opt out of taking your coverage, say experts.
"Employers are going to have to come in and have a frank conversation," says NFIB's Amanda Austin, and explain how tax penalties will work for both you an your employees.
There are consequences for workers who opt out of health insurance altogether. Under the ACA individual mandate, the face a penalty of $95 in 2014, but the fine increases to $695 in 2016.
Under ACA, individuals earning up to $40,000 a year will qualify for a federal subsidy to buy insurance on state exchanges, but not if the plan offered by their employer is considered affordable.
"You can leave the employer plan, but you cannot getsubsidized coverage," explained Austin.
Non-Medicaid Expansion States
As an employer, you are not required to provide coverage for low-wage employees who qualify for full government coverage under Medicaid, the state-federal health program for the poor.
In states that adopt the Obamacare Medicaid expansion, single adults earning up to 138 percent of the Federal Poverty Level, or roughly $15,000,will qualify for Medicaid starting in 2014.
It gets complicated for business owners in the states that opt out of the Medicaid Expansion. Under the current proposed regulations, it appears the burden to provide coverage will fall to employers under shared responsibility rules.
In a state like Texas, which has opted out, analysts at Jackson Hewitt estimate roughly 150-thousand low-wage workers who would be covered under Medicaid Expansion could instead receive subsidies on the federal health exchange. As a result, employers in the state could face extra so-called share responsibility tax penalties of roughly $300 million to $450 million next year.
That's one big reason states won't oppose Medicaid expansion for long,according to Jackson Hewitt's Senior Vice President for Health Policy, Brian Haile.
"Over three years, I predict that a very large number of states are going to expand Medicaid," Haile said.
He's advising clients to look at their overall employee compensation package and to take a longer-term view when making decisions about offering health coverage.
"Take a three-year view of this," he said."Understand that there are some missing pieces that may not be fill themselves in for just a little bit."
H&R Block's Kathy Pickering expects the first year of tax filing season under ACA in 2015 will be confusing for most everyone.
"We are all going to go through a learning curve--the IRS, individuals, and employers," she said.

1 comment:

  1. Quote from the article…

    "In a state like Texas, which has opted out, analysts at Jackson Hewitt estimate roughly 150-thousand low-wage workers who would be covered under Medicaid Expansion could instead receive subsidies on the federal health exchange. As a result, employers in the state could face extra so-called share responsibility tax penalties of roughly $300 million to $450 million next year. That's one big reason states won't oppose Medicaid expansion for long,according to Jackson Hewitt's Senior Vice President for Health Policy, Brian Haile."Over three years, I predict that a very large number of states are going to expand Medicaid," Haile said.

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    Ha! Rick Perry is going to have employers all over his butt to get Texas to opt into Medicaid Expansion. This guy is right. The governors won't be able to take the heat for very long.

    --David

    ReplyDelete

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