Employers Must Make Changes Soon to Avoid O'care

[Yagents]

Also there is nothing to stop an employer now to make most of his employee's contractors and pay them 1099 to get his/her employee count down under 50.

I wouldn't say that:
New Crackdown On Using Independent Contractors - Forbes
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Doesn't sound like much new there except to 'put on notice' those big, bad employers that the IRS will NOT tolerate any fuzzy math as to the 30 hr rule.

What sticks out most to me though is the 'affordability' determination... 9.5% of gross pay. How many employees are paying that for healthcare now? I realize that their employers may be paying that but not employees. When this whole thing slides sideways and employers renig on providing coverage, pay the penalty and give the appx balance of what is left to an employee for them to buy their own coverage... if sure seems like with the increased cost of coverage and the reduced amount an employee might receive after the employer pays the penalty... the avg employee who is left to buy on the infamous exchange, isn't going to be all that happy when they have less coverage and higher oop premium.

Do others see this the same way? It also seems that the attempt to get more people insured could very well end accomplishing just the opposite before it is done. What do they call that... 'unintented consequences'.

I disagree. If existing group plan costs $400/mo, somebody (ER or EE) is paying $4800/year for coverage. Assume employee gets paid $25,000/yr, and assume ER is paying $200/mo of that premium, EE paying other $200/mo.

If under 50 employees, no penalty for ER. But, ER was paying $200/mo for insurance. ER will give $200 to EE (keep whole) through HRA, and EE gets subsidized coverage on exchange costing $200/mo (after subsidies). With HRA money, employee getting free insurance vs. paying $200/mo right now for coverage.

If over 50 employees, and ER drops coverage, and pays $2000 fine. ER gives EE $400 a year to buy coverage through HRA. Subsidized cost in exchange is $200/mo or $2400 a year. Total cost to employee is $2000/year or less than they pay now.

The ER pays the same in both examples. The EE pays less in both examples. It's the taxpayer that gets screwed.

 

[bluediamond]

Well this certainly will be a cluster f when trying to enforce the laws.

So take this case in question:

Employee manager Insurance biz (no salary) manage's two offices in cities away from corporate office and has very little if any supervision from corporate office, should manager have had a salary by the letter of the DOL?

 

[VolAgent]

I wouldn't say that:
New Crackdown On Using Independent Contractors - Forbes
- - - - - - - - - - - - - - - - - -


I disagree. If existing group plan costs $400/mo, somebody (ER or EE) is paying $4800/year for coverage. Assume employee gets paid $25,000/yr, and assume ER is paying $200/mo of that premium, EE paying other $200/mo.

If under 50 employees, no penalty for ER. But, ER was paying $200/mo for insurance. ER will give $200 to EE (keep whole) through HRA, and EE gets subsidized coverage on exchange costing $200/mo (after subsidies). With HRA money, employee getting free insurance vs. paying $200/mo right now for coverage.

If over 50 employees, and ER drops coverage, and pays $2000 fine. ER gives EE $400 a year to buy coverage through HRA. Subsidized cost in exchange is $200/mo or $2400 a year. Total cost to employee is $2000/year or less than they pay now.

The ER pays the same in both examples. The EE pays less in both examples. It's the taxpayer that gets screwed.

You certainly have a lot of faith in employers. What makes you think they will pass through any of the savings on not providing insurance to the employees?

 

[Yagents]

You certainly have a lot of faith in employers. What makes you think they will pass through any of the savings on not providing insurance to the employees?

Employers interest is to avoid rising insurance costs (profit compression), and to get out of the benefits business (a distraction from core biz). They don't have an interest in screwing employees financially. So, as long as the employee will still be able to get great healthcare and insurance, the employer can have comfort in letting the employee shop for a plan that better suits their family needs, vs a one or two size fits all situation like it is now. To ease the shock, employers will try their best to keep employees financially whole to avoid employee departures. If they did have an interest in screwing EE's, they would have dropped the group plan long ago.

 

[djs]

I wouldn't say that:
New Crackdown On Using Independent Contractors - Forbes
- - - - - - - - - - - - - - - - - -


I disagree. If existing group plan costs $400/mo, somebody (ER or EE) is paying $4800/year for coverage. Assume employee gets paid $25,000/yr, and assume ER is paying $200/mo of that premium, EE paying other $200/mo.

If under 50 employees, no penalty for ER. But, ER was paying $200/mo for insurance. ER will give $200 to EE (keep whole) through HRA, and EE gets subsidized coverage on exchange costing $200/mo (after subsidies). With HRA money, employee getting free insurance vs. paying $200/mo right now for coverage.

If over 50 employees, and ER drops coverage, and pays $2000 fine. ER gives EE $400 a year to buy coverage through HRA. Subsidized cost in exchange is $200/mo or $2400 a year. Total cost to employee is $2000/year or less than they pay now.

The ER pays the same in both examples. The EE pays less in both examples. It's the taxpayer that gets screwed.

But, if you use REAL numbers, it doesn't work out this clean. The numbers you used were made up to make your story work.

If you take a 30 year old single adult that makes $35K a year, rerun your numbers, you'll find the individual gets screwed. Its better for the EE if the ER keeps coverage.

Why is this important?

Someone making $25K has never been a good candidate to sell health insurance to anyway. If they have coverage through work, it is probably a very limited plan. Someone making $35K is probably more the norm, at the beginning of being able to afford a health policy on their own and actually is falling off of subsidies (depending on age).

Now, can you make a commission selling a plan on the exchange that involves subsidies?

Dan

 

[VolAgent]

Employers primarily offered health insurance in order to compete for employees. There are some that did it because they needed it and a few because they just thought it was the right thing to do.

If they can suddenly eliminate a big expense, I think you'd be crazy to think they are going to try and keep some or all of the savings versus passing it on to the employees.

IMO, the larger the company the more inclined it will be to keep the savings as management will be further removed from rank and file employees.

 

[Yagents]

But, if you use REAL numbers, it doesn't work out this clean. The numbers you used were made up to make your story work.

If you take a 30 year old single adult that makes $35K a year, rerun your numbers, you'll find the individual gets screwed. Its better for the EE if the ER keeps coverage.

Why is this important?

Someone making $25K has never been a good candidate to sell health insurance to anyway. If they have coverage through work, it is probably a very limited plan. Someone making $35K is probably more the norm, at the beginning of being able to afford a health policy on their own and actually is falling off of subsidies (depending on age).

Now, can you make a commission selling a plan on the exchange that involves subsidies?

Dan

I don't sell group, so forgive me if my numbers are wrong. But, I believe everyone pays the same/similar price regardless of age on a group plan (as I've seen with Cobra prices). So, the exchange plans, while a 3 to 1 price ratio max, will be able to charge lower premiums for younger folks. In your example, assume $400/mo for 35 yr old male on group plan, with $200 paid by each entity.

Kaiser calc states cost of insurance is $3962 in medium cost area for 35 k of income. Cost after subsidies is $3325. If employer still kicks in $2400, cost to EE drops to $925 vs $2400 on group plan.

If $300 group plan cost, with 50% split, EE cost would be $1525 vs $1800 now, if ER still coughs up the $1800.

 

[somarco]

believe everyone pays the same/similar price regardless of age on a group plan

I believe I read something recently that indicated 2014 group plans will abandon the composite rate and use step rates. If true, this will be a shock.

 

[bluediamond]

Has anyone seen this article on the states who refused the exchange?

Dislodging Obamacare | Michael F. Cannon | Cato Institute

 

[stuy119]

I believe I read something recently that indicated 2014 group plans will abandon the composite rate and use step rates. If true, this will be a shock.

Wow - that is going to be a major shock for a lot of groups. There are quite a few (smaller) group out there that have not having composite rates. I can only imagine how pissed the larger groups would be if they had to transition - especially the payroll person.