the Semi-retired and the health care act

[KevininIowa]

I am trying to get a handle on what basically should or will happen with the new health care laws being enacted.

I am 57, retired with a pension but currently working part-time at a community college. My status is part-time regular with partial benefits (sick and vacation leave only). I work an average of 30+ hours a week. Never less than 30 hours.

What will my employer be required to do as far as health insurance? The Community College currently provides single health insurance in full to their full-time employees, and a reduced premium for employee+spouse, etc.

I am currently paying the full cost of health insurance through the retired group from my former employer at the rate of around $600 a month.

My questions are -- will my employer be providing me with insurance as a newly qualified "full-time" employee based on health care act? Or will my current employer only have to offer access to the health insurance with me paying the full premium as I do now from my former employer? My salary from my current employer is about $38,000. Will my premium be based on the fact that 9.5% of my salary is considerably less than the $600 a month I am paying now? That percentages is the rate that they say that employers should limit the premium cost of coverage to their full-time employees based on their salary.

Overall, my salary plus my pension is $38,000 + $50,000 for a total of about $90,000. This does not include my wife who is retiring in May, 2013. She will also have a pension of at least $40,000 and plans to work part-time too. She currently makes around $72,000 before retiring in May.

I know that is probably way too much information to digest, but trying to plan a little ahead and hope for some premium relief as we will be paying around $1,300 a month for the both of us to be covered by our former employers.

[samclem]

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Originally Posted by KevininIowa I am 57, retired with a pension but currently working part-time at a community college. My status is part-time regular with partial benefits (sick and vacation leave only). I work an average of 30+ hours a week. Never less than 30 hours. What will my employer be required to do as far as health insurance? The Community College currently provides single health insurance in full to their full-time employees, and a reduced premium for employee+spouse, etc.

According to reports I've read, some community colleges plan to reduce the hours of the adjunct and other part-time faculty to get them under the 30 hour per week threshold. That removes the colleges from the expensive obligation to provide health insurance coverage under the new law. Other employers are making similar cost/benefit decisions. Here's one recent article. In part:

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A handful of schools, including Community College of Allegheny County in Pennsylvania and Youngstown State University in Ohio, have curbed the number of classes that adjuncts can teach in the current spring semester to limit the schools' exposure to the health-insurance requirement. Others are assessing whether to do so, or to begin offering health care to some adjuncts. In Ohio, instructor Robert Balla faces a new cap on the number of hours he can teach at Stark State College. In a Dec. 6 letter, the North Canton school told him that "in order to avoid penalties under the Affordable Care Act…employees with part-time or adjunct status will not be assigned more than an average of 29 hours per week."

There was some good news:

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As part of the college's decision to lower the cap on the number of classes adjuncts can teach, the administration also raised the pay per class by 2.7% and will start offering a health-care plan that adjuncts can buy through the school, Mr. Hoovler said. The college says the plan should be cheaper than what adjuncts could buy on the open market.

For some low-paid workers reduced to 30 hours per week the situatation will work out okay. They'll get an additional part-time job and buy their health insurance individually through the new health insurance exchanges being set up by the federal government (and some states). With low pay, they will qualify for taxpayer subsidies to help them buy health insurance. In your case the subsidies wouldn't help, as they end (abruptly) when household income is 400% of the poverty level: in 2012 that was 60,520 for a two-person household. The PPACA benefits are calculated based on Modified Adjusted Gross Income (MAGI), here's how that is calculated. Yes, it includes your pension income.


It's a tough situation. It's possible your school may offer the 30+ hours and coverage just to keep good faculty, but it's not a given. As you note, subsidies are also available from the government if employers provide health insurance but the worker costs exceed 9.5% of their income. But, again, these subsidies would be based on your MAGI, so you'd be be unlikely to benefit from them.

In a nutshell: If the school keeps you at 30+ hours per week then they have to provide health insurance benefits and your costs will almost certainly be less than they are right now. If the school decides to limit you to less than 30hours/week, then you'll probably get no help under PPACA with premium subsidies.

Best of luck. It would be a real punch in the gut if you still get no health coverage from the school >and< . as a result of the law, get your hours cut. There are many unintended consequences emerging as this piece of legislation is put into practice. I'm not an expert in this, so you'll definitely want to look into this yourself. Has the benefits adviser at the college put out any information?

[MichaelB]

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Originally Posted by KevininIowa Overall, my salary plus my pension is $38,000 + $50,000 for a total of about $90,000. This does not include my wife who is retiring in May, 2013. She will also have a pension of at least $40,000 and plans to work part-time too. She currently makes around $72,000 before retiring in May. I know that is probably way too much information to digest, but trying to plan a little ahead and hope for some premium relief as we will be paying around $1,300 a month for the both of us to be covered by our former employers.

Kevininiowa, from the Kaiser Family Foundation. Your employer is under no obligation to provide health care insurance and you will be able to find a policy in the state health care exchange,

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Assesses a fee of $2,000 per full-time employee, excluding the first 30 employees, on employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit. Employers with more than 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees.Implementation: January 1, 2014

Implementation Timeline - Kaiser Health Reform

The subsidy calculator is here Health Reform Subsidy Calculator - Kaiser Health Reform but I suspect with your joint income over $100k you should expect to pay the full unsubsidized amount.

[KevininIowa]

Nothing from the benefits administrator. The community college has about 30 part-time regular employees who are 75% FTE or 30+ hours a week (partial benefits) that includes myself. They have about 1,000 employees who are full-time faculty or staff with full-benefits, another 1,500 or so employees that are either part-time regular staff 50% time (partial benefits), adjunct instructors (no benefits) or part-time temporary staff (no benefits).

[KevininIowa]

My assumption is that the cost in the exchange is going to be higher for us than continuing to pay the full-price through our former employers. Right now based on the calculator cost of the exchange we would have to pay $1,500+ for our monthly premium and through our former employers it is $1,300 a month.

[bUU]

The exchanges are definitely intended to supplement, not supplant, employer-provided insurance, and indeed set minimum standards for employer-provided insurance so that employers aren't driven to provide inadequate coverage just to "check off" that item on their offering package (and therefore not look like Ebeneezer Scrooge). Some employers will choose to take actions to get themselves out of the business of providing health insurance, which perhaps may drive the government to find a more permanent solution. However, until we see how ACA works, I doubt anyone is going to stick their neck out to suggest an even bigger change, even if the reality means that only a bigger change will achieve what people really want.

[Stevewc]

Good Morning to all,
I just read this article and found it informative. Its seems to gives one of the few, more positive lay outs on the upcoming changes that I remember seeing.
I was about to start a new thread on it but decided to throw it in for this current discussion.
See what you guys think, give it a once over.
Steve

Get ready for health-care reform changes - Elizabeth O'Brien's Retire Well - MarketWatch

[ERD50]

Am I interpreting this correctly?

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Assesses a fee of $2,000 per full-time employee, excluding the first 30 employees, on employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit.

So hiring that 51st full-time employee could cost a company $42,000 ($2,000 x the 51 minus the first 30) in fees?

If so, that looks like a big problem to me. I know people who think that getting bumped to the next income tax bracket causes all your income to be subject to the higher rate, rather than the more reasonable/logical reality where just the amount above the higher bracket is subject to the higher rate.

So if I have this one right, it is more like having that income bracket apply to some of the money below the bracket. That's crazy. Pls tell me I'm wrong.

-ERD50

[Texas Proud]

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Originally Posted by ERD50 Am I interpreting this correctly? So hiring that 51st full-time employee could cost a company $42,000 ($2,000 x the 51 minus the first 30) in fees? If so, that looks like a big problem to me. I know people who think that getting bumped to the next income tax bracket causes all your income to be subject to the higher rate, rather than the more reasonable/logical reality where just the amount above the higher bracket is subject to the higher rate. So if I have this one right, it is more like having that income bracket apply to some of the money below the bracket. That's crazy. Pls tell me I'm wrong. -ERD50

Yes... hiring that 51st employee can cost a lot of money... from what I can remember, this is not the only law that has 50 as a cut off..


BTW, I read that in France the cut off for a lot of laws is 25.... it is a big surprise that there are many many more companies with 24 people than 25....

[bUU]

It would be nice if there was a requirement to have every regulation be formulaic instead of based on a schedule, i.e., free of "step functions".

[ERD50]

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Originally Posted by bUU It would be nice if there was a requirement to have every regulation be formulaic instead of based on a schedule, i.e., free of "step functions".

I agree 10^nth power, where n is the number of places this can be applied!!!

Step functions and 'gates' just screw up everything, and lead to hard feelings. What's the point of offering a full 100% warranty up to the 365th day, and a ZERO warranty on day 366? All it does is aggravate the customer that has a problem shortly after the warranty. A sliding scale makes so much more sense.

And it is used, for tires and batteries for example, so it is not an 'out there' idea. Got a 6 year warranty and your battery dies at year 3? OK, we cover 50% of the cost, as you already got 50% use from it. Makes sense.

-ERD50

[ERhoosier]

All of the above assumes no legislative changes are made in ACA. History shows that Congress often tweaks most major new programs as full implementation proceeds, and Sec HHS has huge power under ACA (e.g. pushing back Nov deadline on states deciding whether or not to set up own exchanges). Like a colonoscopy, only time will tell how this all plays out in the end.

[samclem]

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Originally Posted by ERD50 So if I have this one right, it is more like having that income bracket apply to some of the money below the bracket. That's crazy. Pls tell me I'm wrong.

Nope, you've got it right.
So, if I had a chain with 5 restaurants and a total of 70 employees, I'd break up the business into smaller ones so each would stay under the 50 employee limit. That's the way to stay competitive and to shift employee health care costs to the US taxpayer (because the workers would buy their policies on the exchange and some would get govt subsidies). Of course, that means several tax returns instead of one, more paperwork for insurance and incorporation/LLC purposes. It's a full employment act for lawyers and accountants. Will this make US businesses more competitive in the global economy?

[bUU]

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Originally Posted by samclem Will this make US businesses more competitive in the global economy?

I worry about that being such a priority that it trumps other priorities. I've got six developers in my group. We have a new project coming up. What's going to make my boss' "business" more competitive? Adding another six Americans, or firing the six Americans and adding twenty-four Indians in Bangalore? The only thing that's going to make our operation "more competitive in the global economy" in this context is cutting everyone's salaries in half.

[samclem]

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Originally Posted by bUU I worry about that being such a priority that it trumps other priorities. I've got six developers in my group. We have a new project coming up. What's going to make my boss' "business" more competitive? Adding another six Americans, or firing the six Americans and adding twenty-four Indians in Bangalore? The only thing that's going to make our operation "more competitive in the global economy" in this context is cutting everyone's salaries in half.

Welcome to the world. If your boss doesn't find a way to be the most competitive, he deserves to lose business to another company (the one that hired the work out to the most efficient source).

The only thing that will keep Americans employed and their wages (relatively) high is for them to continue to be worth the money. That's it.

A business exists to provide returns to the owners of that business. Serving customers, employing people, etc are means to that end, and are necessary, but they aren't the purpose of the business. When businesses get that backward they go under and other businesses take their place.

[bUU]

Then our kids are truly doomed - not that they'll die or anything, but simply that they're being brought up in a society built on a premise of an American standard of living that will be unjustifiable as the rest of the world learns from us how to compete. The US will therefore have its standard of living forcibly lowered to that of other nations, since many of them are achieving global competitiveness by providing products and services comparable to our, produced by labor living at a significantly lower standard of living. And I don't disagree that that's necessarily going to be the case. My point is that I hope that business owners in the United States are going to be more compassionate than strictly coldly callous about it.

[ERD50]

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Originally Posted by samclem Nope, you've got it right.

Geez, I said "please", can't you throw a guy a bone?

I gotta laugh, as this is depressing.

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Originally Posted by bUU I worry about that being such a priority that it trumps other priorities. I've got six developers in my group. We have a new project coming up. What's going to make my boss' "business" more competitive? Adding another six Americans, or firing the six Americans ...

So I've been thinking about this in terms of limiting growth of jobs, but that comment makes me think about the mall business with say 51-55 employees. Due to that stupid 'step function', they are going to very motivated to cut employees. That 51st is costing them salary plus $42,000 'fees'. The 55th spreads that to $10,000 for each of the 51st-55th employees - still a big #.

So it's not just growth, a lot of people could see themselves fired or cut to part time. How much will they get in unemployment benefits?

Now, if it was an incremental cost, that would be less of an issue. That 51st would cost more, but wouldn't incur the cost of employee #30 and on in one fell swoop.

-ERD50

[ERD50]

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Originally Posted by bUU ... My point is that I hope that business owners in the United States are going to be more compassionate than strictly coldly callous about it.

I think it depends on your definition of 'compassion'. I don't see it as compassionate to put up barriers to trade to protect our wages and high standard of living, if it means depriving someone on the other side of the world a step up in their standard of living. And their step up is likely much bigger deal for them than whether we have a larger TV, hot tub, pool, etc.

And in practical terms, all emotion/ethics aside, I don't think we can 'protect' our standard of living - we need to adapt. Hopefully with innovation so it isn't so much a zero-sum game, but it might mean some adjustment ot our standard of living, or a combo.

-ERD50

[bUU]

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Originally Posted by ERD50 So I've been thinking about this in terms of limiting growth of jobs, but that comment makes me think about the mall business with say 51-55 employees. Due to that stupid 'step function', they are going to very motivated to cut employees. That 51st is costing them salary plus $42,000 'fees'.

As I alluded to earlier, the problem stems from it being a step function. They simply shouldn't have exempted small companies - from anything. If the business doesn't have the wherewithal to survive paying fair wages and benefits, then maybe we'd be better off with a larger business operating that small business as an outlet of the larger business. "Mom & Pop" is all fine and good - let Mom and Pop actually work the place instead of having employees, and if they need more help, then maybe it isn't right to consider it a "Mom & Pop".

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Originally Posted by ERD50 Now, if it was an incremental cost, that would be less of an issue.

Precisely.

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Originally Posted by ERD50 I don't see it as compassionate to put up barriers to trade to protect our wages and high standard of living, if it means depriving someone on the other side of the world a step up in their standard of living.

No question that everything is relative, with compassion being viewed in one case from the standpoint of "within the nation" and in the other case from the standpoint of "world community". Though, by extension of that logic, there shouldn't be any support for keeping wealth within the family from generation to generation, compassion being viewed not from the perspective of family nor nation but rather the world.

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Originally Posted by ERD50 And in practical terms, all emotion/ethics aside, I don't think we can 'protect' our standard of living - we need to adapt.

Meaning, preparing our children to live lives substantially less rich than our own.

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Originally Posted by ERD50 Hopefully with innovation so it isn't so much a zero-sum game, but it might mean some adjustment ot our standard of living, or a combo.

Agreed. It won't be "dying in the streets" bad, but still a substantial step-down. The problem is that we're not only saddling them with the substantially lower standard-of-living, but a massive amount of debt, incurred predicated on the assumption that future growth would cover it - that they could have just passed it forward. Once we're more clearly in the predicament we're talking about here, I doubt we'll be extended as much credit as we are now. So it'll be a double-whammy for our kids.

[ziggy29]

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Originally Posted by bUU As I alluded to earlier, the problem stems from it being a step function. They simply shouldn't have exempted small companies - from anything.

I'm not sure I like this. Is it really in the public interest to kill off small business by allowing a few huge behemoths to dominate everything and use economies of scale to crush competition? I'm not sure. I think we're becoming too corporate as it is, and I think huge corporate interests have too much power and control over public policy already (and that was even *before* Citizens United). I don't particularly care to give them even more power to wield over consumers, labor and small business. It's great to talk about free markets, but free markets stop being free when the barriers to competition become too great. And let's not forget that small business is currently the major driver in job growth these days.

Huge companies already have major negotiating power in health insurance rates that small employers simply don't have.

But yeah, any time public policy creates a "cliff" rather than a purely phased in approach, it can have major consequences -- such as not hiring that 51st employee or making sure you stay under 400% of the poverty line for future health insurance subsidies so that single dollar that gets you over 400% results in losing thousands of dollars.