Affordable Health Care Law under review by SCOTUS

[Lurker765]

Forgive me if I have forgotten all the finer points of "the plan". If the employer is fined and does not provide insurance options for the employee - then the employee would have to pay out of pocket some type of premium for insurance. Cant that same employee choose not to purchase health care insurance because they are working 30 hours a week at min wage and cant afford to pay the premium out of pocket? If people had to choose between a weeks worth of dinner vs. health care premium for the month - well food is going to take precedence.

Im a bit brain dead right now as work has been busy and somewhat challenging lately.....

I wasn't trying to be snide or accusatory. Sorry if I came across that way.

In this situation, yes, the employer would be fined and the employee would have to pay out of pocket for insurance through one of the state exchanges. The employee is required by law to purchase health insurance or pay a penalty (which varies as per:
http://healthreform.kff.org/the-basi...flowchart.aspx )

People who have economic difficulty paying for health insurance are eligible for assistance in meeting coverage minimums based on a sliding household income scale. Those below the poverty line will go on Medicaid unless their state refuses to expand Medicaid.

Some of that assistance money will no doubt be coming from Papa Johns, Denny's, etc if those employers decide that they want full time employees and would rather throw $2000 to the government penalty rather than towards their employee's health plans.

[Lurker765]

Under Obama Care is there a fine for not insuring part time employees.

Sort of. The definition of FTE is quoted below:

http://www.kff.org/healthreform/upload/8275.pdf

2. Penalties for Not Providing Affordable Coverage
Though there is no requirement that small businesses offer health insurance, beginning in 2014, some smaller
businesses (with more than 50 employees) will have to pay a penalty if they do not offer affordable coverage.
 Businesses with 50 or fewer FTE employees are exempt from these penalties.
 Businesses with 51 or more FTE employees will be fined $2,000 per employee (excluding the first 30
employees) if they do not offer coverage for employees who average 30 or more hours per week. Note that
there is no penalty for part-time employees not offered coverage.

2
Full-time Equivalents (FTEs) are calculated by summing the hours of full and part-time employees. For example, two half-time
employees are equivalent to one full-time employee.

[baldgriff]

2. Penalties for Not Providing Affordable Coverage
Though there is no requirement that small businesses offer health insurance, beginning in 2014, some smaller
businesses (with more than 50 employees) will have to pay a penalty if they do not offer affordable coverage.
 Businesses with 50 or fewer FTE employees are exempt from these penalties.
 Businesses with 51 or more FTE employees will be fined $2,000 per employee (excluding the first 30
employees) if they do not offer coverage for employees who average 30 or more hours per week. Note that
there is no penalty for part-time employees not offered coverage.

2
Full-time Equivalents (FTEs) are calculated by summing the hours of full and part-time employees. For example, two half-time
employees are equivalent to one full-time employee.

Lurker - I apologize if you thought I was making a remark about you. I used "the plan" to describe Obamacare and my brain is seriously fried right now... That said...

Does anyone not believe that businesses are trying to determine what has the least impact to their bottom line?? Seriously, the "fines" are less than what they spend on the benefit for the employee as it is. Not only that, now the employee may likely work fewer hours because the business is trying to manage their FTE and 2 people at PT may now be cheaper than 1 FT - so why not break the job up between two people.

Then the employee has to go out and by law purchase a medical plan to cover them (which they may or may not qualify for subsidy). If someone has to pick between food on the table and a medical premium - - - yeah well they will go without the coverage.

[Mithrandir]

Lurker - I apologize if you thought I was making a remark about you. I used "the plan" to describe Obamacare and my brain is seriously fried right now... That said...

Does anyone not believe that businesses are trying to determine what has the least impact to their bottom line?? Seriously, the "fines" are less than what they spend on the benefit for the employee as it is. Not only that, now the employee may likely work fewer hours because the business is trying to manage their FTE and 2 people at PT may now be cheaper than 1 FT - so why not break the job up between two people.

Then the employee has to go out and by law purchase a medical plan to cover them (which they may or may not qualify for subsidy). If someone has to pick between food on the table and a medical premium - - - yeah well they will go without the coverage.

Shouldn't the fines have been very, very, very high if the desired outcome was to actually insure the employees?

[baldgriff]

Shouldn't the fines have been very, very, very high if the desired outcome was to actually insure the employees?

According to Lurkers post the fine will be $2000 per employee. Businesses are inevitably going to figure out how to manage to that, and already are.... They have a bottom line and will determine what is cheaper for them - which may be not to provide the benefit at all. So then the employee is mandated to purchase coverage from companies that will be providing service to people legally required to come to them for coverage. What a joke.

[Lurker765]

Lurker - I apologize if you thought I was making a remark about you. I used "the plan" to describe Obamacare and my brain is seriously fried right now... That said...

Does anyone not believe that businesses are trying to determine what has the least impact to their bottom line?? Seriously, the "fines" are less than what they spend on the benefit for the employee as it is. Not only that, now the employee may likely work fewer hours because the business is trying to manage their FTE and 2 people at PT may now be cheaper than 1 FT - so why not break the job up between two people.

Then the employee has to go out and by law purchase a medical plan to cover them (which they may or may not qualify for subsidy). If someone has to pick between food on the table and a medical premium - - - yeah well they will go without the coverage.

Once again, under the current system the businesses are completely free to determine what has the least impact to their bottom line. They could cut health coverage completely at this point with no penalties (until 2014). Under Obamacare there is slightly more incentive to not do this since they would have to pay a penalty if they are above a 50 person company.

Under the current format businesses are indeed in a race to the bottom. They want to reduce costs and if they could they would in some cases take slave labor with no health care. Businesses in some other countries do this. If American companies want to compete with sweat shop labor they will in some cases try to reduce their employees to sweat shop conditions. Other companies will find different ways to compete.

Obamacare is an attempt to put companies competing in America on somewhat equal footing. Your local pizza shop that is giving health coverage to its employees (if they do) is currently competing with Papa Johns who does not. That is an extra expense to them. In addition, since they are paying health coverage they indirectly pay for the health coverage of the Papa Johns employees who go to the ER with an emergency condition and who do not have their own health coverage.

Breaking up a job between two people has its own problems. Finding one quality FT employee is easier than finding two quality PT employees. More people at a business is often more headaches due to schedules, paperwork, flaky people, etc. It is a loophole in Obamacare, but it is a somewhat self policing loophole. You just don't get as many people wanting to work two part time jobs -- better employees don't often do this, but if your business does not need "great" employees then you can probably get away with more part timers to avoid a $2000 health care penalty (assuming your business has over 50 people).

[Mithrandir]

According to Lurkers post the fine will be $2000 per employee. Businesses are inevitably going to figure out how to manage to that, and already are.... They have a bottom line and will determine what is cheaper for them - which may be not to provide the benefit at all. So then the employee is mandated to purchase coverage from companies that will be providing service to people legally required to come to them for coverage. What a joke.

The shouldn't the fine have been oh $25,000 per employee?

[Lurker765]

According to Lurkers post the fine will be $2000 per employee. Businesses are inevitably going to figure out how to manage to that, and already are.... They have a bottom line and will determine what is cheaper for them - which may be not to provide the benefit at all. So then the employee is mandated to purchase coverage from companies that will be providing service to people legally required to come to them for coverage. What a joke.

How is it more of a joke than the current system? Businesses currently have a bottom line and can cut health care completely right now with no penalty.

The insurance companies agreed to lower rates in exchange for getting everyone into the pool of customers. These customers (poor and young people) used to skip out on health insurance before, but still used the system on an emergency measure which was paid for by the people who actually paid for their insurance. They were free-loading before, but in an unhealthy way since they did no preventive measures and only came into the hospital when something had gone terribly wrong and was more difficult to fix.

[Lurker765]

The shouldn't the fine have been oh $25,000 per employee?

Many businesses would just not hire people in that case. The goal is to make more incentives for employers to compete evenly on employees while providing health coverage for the nation -- not to cripple hiring and raise unemployment.

[dslaw]

you can probably get away with more part timers to avoid a $2000 health care penalty (assuming your business has over 50 people).

But you don't really avoid the penalty by having part timers. The fine is $2K per FTE so if I have 1 person working 40 hours a week or 20 people at 20 hours per week or 4 people at 10 hours per week I will still have to pay a $2,000 fine if I don't offer insurance. Being a good business owner I already reduce my labor to no more than I have to so I cannot cut total hours so it will be difficult to manage the amount of the fine. The question will be is it cheaper for me to now offer insurance or just pay the penalty.

One thing I do not know is how does the employer/employee cost structure work. Currently my company pays roughly $3,500 a year for me to have insurance and I pay $1,000 per year so the plan is $4,500 per year. Could I, as a business owner, simply go out and get this same insurance plan and tell the employee they have to pay $2,600 per year and I will kick in $1,900 per year. I would offer the plan so I don't have to pay the penalty and I will pay $100 less per year than if I paid the penalty.

[Lurker765]

But you don't really avoid the penalty by having part timers. The fine is $2K per FTE so if I have 1 person working 40 hours a week or 20 people at 20 hours per week or 4 people at 10 hours per week I will still have to pay a $2,000 fine if I don't offer insurance. Being a good business owner I already reduce my labor to no more than I have to so I cannot cut total hours so it will be difficult to manage the amount of the fine. The question will be is it cheaper for me to now offer insurance or just pay the penalty.

One thing I do not know is how does the employer/employee cost structure work. Currently my company pays roughly $3,500 a year for me to have insurance and I pay $1,000 per year so the plan is $4,500 per year. Could I, as a business owner, simply go out and get this same insurance plan and tell the employee they have to pay $2,600 per year and I will kick in $1,900 per year. I would offer the plan so I don't have to pay the penalty and I will pay $100 less per year than if I paid the penalty.

That isn't true about not avoiding the penalty. From the article I linked:
"Note that there is no penalty for part-time employees not offered coverage."

Part time employees count towards the 50 person number calculation of how many people work at a company.

From the other link I provided:

http://www.kff.org/healthreform/upload/8275.pdf

To avoid penalties, employers must offer insurance that covers at least 60% of the actuarial value of the cost of
benefits. The coverage also must be affordable to employees, meaning an individual employee’s premium
cannot exceed 9.5% of their household income. If the coverage offered does not meet the affordability
standard, employees may receive tax credits to purchase insurance on their own through the exchange. If this is
the case, small employers will either have to pay $3,000 per employee receiving the tax credit, or pay $2,000 per
employee excluding the first 30 workers (whichever amount is less).

It also mentions:
3. Tax Credits to Assist in the Cost of Health Insurance
Small businesses with fewer than 25 FTE employees may be eligible for tax credits to assist in the cost of health
insurance.
vii
To qualify, such businesses must have average annual wages below $50,000 and must pay at least
half of the cost of their employee’s health insurance.


There are additional links on that page that can explain things in more detail if you are a small business owner and would like to find out what things will change. If you are a small business owner with less than 50 people then things probably won't change at all from the current system.

[Mithrandir]

Many businesses would just not hire people in that case. The goal is to make more incentives for employers to compete evenly on employees while providing health coverage for the nation -- not to cripple hiring and raise unemployment.

I see what you mean. But businesses need employees to operate so i don't think companies could "not hire people"...they would go out of business, right?

[Mithrandir]

That isn't true about not avoiding the penalty. From the article I linked:
"Note that there is no penalty for part-time employees not offered coverage."

Part time employees count towards the 50 person number calculation of how many people work at a company.

From the other link I provided:

http://www.kff.org/healthreform/upload/8275.pdf

To avoid penalties, employers must offer insurance that covers at least 60% of the actuarial value of the cost of
benefits. The coverage also must be affordable to employees, meaning an individual employee’s premium
cannot exceed 9.5% of their household income. If the coverage offered does not meet the affordability
standard, employees may receive tax credits to purchase insurance on their own through the exchange. If this is
the case, small employers will either have to pay $3,000 per employee receiving the tax credit, or pay $2,000 per
employee excluding the first 30 workers (whichever amount is less).

It also mentions:
3. Tax Credits to Assist in the Cost of Health Insurance
Small businesses with fewer than 25 FTE employees may be eligible for tax credits to assist in the cost of health
insurance.
vii
To qualify, such businesses must have average annual wages below $50,000 and must pay at least
half of the cost of their employee’s health insurance.


There are additional links on that page that can explain things in more detail if you are a small business owner and would like to find out what things will change. If you are a small business owner with less than 50 people then things probably won't change at all from the current system.

Does everything have to be so damn complicated????

[baldgriff]

How is it more of a joke than the current system? Businesses currently have a bottom line and can cut health care completely right now with no penalty.

The insurance companies agreed to lower rates in exchange for getting everyone into the pool of customers. These customers (poor and young people) used to skip out on health insurance before, but still used the system on an emergency measure which was paid for by the people who actually paid for their insurance. They were free-loading before, but in an unhealthy way since they did no preventive measures and only came into the hospital when something had gone terribly wrong and was more difficult to fix.

Currently employers offer it as a "benefit" to the employee - it is part of the competition to attract employees. True they could decide not to offer the benefit to the employee (as some employers currently do). Now the cynic in me says every employer will decide either pay the less of the fine or the cost of the benefit to the employee. Either way its costing them $2k.

So people without medical insurance will now be required to go out and purchase insurance from carriers that "have promised to reduce the expense". How can one expect a poor person or young person - that works in a job where they currently get no medical benefits - to all of a sudden be able to afford the additional expense of "discounted medical insurance". Again - if they have to choose between putting food on the table or paying a monthly premium - food wins every time.

It just seems in my mind that this policy doesnt take into account that there are a number of people in this world that are barely making it, and are without medical insurance. In a few months, well they will be working the same job, maybe working the same number of hours, for an employer than may find it cheaper to not provide the benefit - and how will they be able to afford to pay for insurance?

The employee isnt getting anything more to cover this expense - but now they are mandated that they have to get coverage.

[dslaw]

That isn't true about not avoiding the penalty. From the article I linked:
"Note that there is no penalty for part-time employees not offered coverage."

Part time employees count towards the 50 person number calculation of how many people work at a company.

I was using the FTE requirement as both the 50 person rule and the penalty. I should go home now since I learned something new. Thanks.