Obamacare

[jollystomper]

this may sound crazy but this law will encourage companies to dump people off medical coverage.

pay the fines and give the employees a fixed amount to buy coverage-sounds like a winner from a company standpoint and all perfectly legal

Not crazy at all. This is somewhat how my Megacorp now handles retiree health insurance. One gets a pot of money for paying insurance premiums for the plans it offers to regular employers. Of course based on family size it may only last 2-4 years, but you can use some of your money to stretch it out and try to fill gap until medicare eligibility.

 

[gerrym51]

Not crazy at all. This is somewhat how my Megacorp now handles retiree health insurance. One gets a pot of money for paying insurance premiums for the plans it offers to regular employers. Of course based on family size it may only last 2-4 years, but you can use some of your money to stretch it out and try to fill gap until medicare eligibility.

actually i was talking about all employee health insurance. by codifiing what happens if a company drops health insurance totally and pays fines etc. they have in effect made it ok and legal.

 

[travelover]

this may sound crazy but this law will encourage companies to dump people off medical coverage.

pay the fines and give the employees a fixed amount to buy coverage-sounds like a winner from a company standpoint and all perfectly legal

It would seem that this would do more to lower health care costs than just about anything. I wouldn't care how many tickets I got if my company paid my car insurance. And I wouldn't care what the bump shop charged for an accident, either.

Health care will only get cheaper when Joe Average has to feel the pain directly.

 

[NotMyFault]

It would seem that this would do more to lower health care costs than just about anything. I wouldn't care how many tickets I got if my company paid my car insurance. And I wouldn't care what the bump shop charged for an accident, either.

Health care will only get cheaper when Joe Average has to feel the pain directly.

+1

 

[meierlde]

Not crazy at all. This is somewhat how my Megacorp now handles retiree health insurance. One gets a pot of money for paying insurance premiums for the plans it offers to regular employers. Of course based on family size it may only last 2-4 years, but you can use some of your money to stretch it out and try to fill gap until medicare eligibility.

One difference at my megacorp its so much per month and you get to pay the rest. I expect over time the exchanges to expand to allow companies to contribute to premiums and duck the costs of managing their health care plan (although its not obvious that for large corps that it is cheaper, the insurance companies here are basically claims managers, the actual bills pass thru to the company fund, i.e. the company is essentially running its own health insurer. )

 

[samclem]

Companies aren't required to provide health insurance now. Why do they?

Exactly. It's because they can buy it more cheaply than their employees can buy it for themselves (due to government tax breaks and the availability of group rates). It's government-subsidized employee compensation. And, for certain employees (e.g. those with uninsurable family members) this kind of coverage will induce them to stay at a job for very low take-home pay. They can't quit.

This dynamic changes a lot when the health insurance exchanges are up and running. It very well could kill employer-provided health care, which is a perhaps unintended but welcome by-product of ACA in my view.

 

[youbet]

It very well could kill employer-provided health care, which is a perhaps unintended but welcome by-product of ACA in my view.

+1

 

[Live And Learn]

I think we absolutely should decouple j*bs and health care. However, I can see my company not offering HI of 15k, paying the 3k fine, and banking the 12k for themselves - effectively giving me a 12k salary cut (actually closer to 15k or 20k gross income)

DH makes 12k a year and I get HI through him. Cost is 14k to his company. The only reason he works there are the HI benefits. So to keep "total comp" the same the company would need to double the salaries paid ... yeah, like that'll happen ! With subsidies the 12k income definitely qualifies for subsidies, but once I add in dividends, cap gains, etc I bump up to that 400% FPL pretty quickly.

 

[youbet]

I think we absolutely should decouple j*bs and health care. However, I can see my company not offering HI of 15k, paying the 3k fine, and banking the 12k for themselves - effectively giving me a 12k salary cut (actually closer to 15k or 20k gross income)

DH makes 12k a year and I get HI through him. Cost is 14k to his company. The only reason he works there are the HI benefits. So to keep "total comp" the same the company would need to double the salaries paid ... yeah, like that'll happen ! With subsidies the 12k income definitely qualifies for subsidies, but once I add in dividends, cap gains, etc I bump up to that 400% FPL pretty quickly.

Employers will do what they have to do (within the bounds of profitability) to attract and retain the employees they need to be competitive and stay in business.

My guess (and it's strictly a guess) is that many employers will cancel HI since it's a pita for them to manage and will offer some amount of funding to buy insurance on the exchanges. The amount of funding will depend on what they think they have to do to attract and retain the employees they need.

 

[Katsmeow]

This dynamic changes a lot when the health insurance exchanges are up and running. It very well could kill employer-provided health care, which is a perhaps unintended but welcome by-product of ACA in my view.

I don't it is unintended in the long run at all. I think pretty much everyone (well, everyone reasonable) realizes that it doesn't make sense to tie health insurance to employment.

All of that said - I am skeptical of claims that if employer's don't have to pay for health insurance that will start paying employees the savings. I think it is far more likely that they quit paying for health insurance and just keep the savings....

 

[explanade]

If the job market ever heats up again, I don't know that they can get away with not providing health care and not compensating.

In certain fields or industries, still pretty competitive.

There's no requirement for employers to provide a 401k match, yet plenty do it.

 

[photoguy]

I think we absolutely should decouple j*bs and health care. However, I can see my company not offering HI of 15k, paying the 3k fine, and banking the 12k for themselves - effectively giving me a 12k salary cut (actually closer to 15k or 20k gross income)

If they could get away with this and still keep their employees, wouldn't they already have dropped health care? or at least make employees pay the bulk of it?

 

[Live And Learn]

Points well taken on contining of health care coverage. I'm just overly pessimistic when it comes to my budget. Thanks for making me feel better about it. You have valid points.

 

[Malcolm2]

Companies aren't required to provide health insurance now. Why do they?

Excellent point. It is something healthy called competition in the job market. Always the best way to sort out market driven forces. It will be most interesting to see how the economics turn out when many late term baby boomers wait to try to jump on Obamacare only when they start to need medical care. How will that work out for those paying? Those pesky demographics...

 

[Texas Proud]

For the people who think that a large number of companies are going to drop health insurance because of Obamacare.... I just do not see it...

When I worked in the UK for a year, (back in 2000), companies were starting to offer health insurance to their workers.... and they have 'free' health care!!!

As long as it gives them a competative advantage (or to eliminate one from another company) to attract employees, they will offer these..

Remember that this in only health care... most large companies also offer dental, vision, STD, LTD, life, flex spending account, 401(k) with a match, sick leave and vacation time...

Now, smaller companies that have low paid employees probably do not offer these things at all and will have to make a decision on what to do.... but I think that any company that currently offers health care will not drop it to save money... heck, they never had to offer it at all and could have saved even more money, but did not...

 

[bUU]

I think there is a very strong bias in our society against (truly) small businesses. Everything seems to be very deliberately arrayed to foster the development of businesses that start "small" meaning 250-500 employees (13 CFR 121), not two or three employees.

 

[explanade]

Well I've worked for a small business and a big business and I know what I prefer.

Health care, regular raises, stock options and employee stock purchase plan and some other perks for the latter.

The small business guy I worked for was pleasant enough to work for but when I quit after about 9 months with no offers of a raise, he looked hurt and asked if I was leaving for more money.

There was a huge gap in pay, before the benefits.

 

[ziggy29]

Well I've worked for a small business and a big business and I know what I prefer.

Health care, regular raises, stock options and employee stock purchase plan and some other perks for the latter.

When was this? Most people I know who work for big businesses have barely sniffed any raises at all, if any, in the last 5-6 years. Very few stock options, either.

I'd add one benefit to working for a small business, while also acknowledging some of the advantages of a Megacorp: the small business probably isn't going to be publicly traded and given its marching orders from Wall Street, which only cares about "hitting the numbers" this quarter, no matter how you do it, and doesn't care how it screws employees (or the company in the long run).

 

[samclem]

but I think that any company that currently offers health care will not drop it to save money... heck, they never had to offer it at all and could have saved even more money, but did not...

Maybe, we'll see. The company will do whatever gives them the best return on the compensation they pay. If health insurance now costs them $10K per worker (after the tax benefits) and they can dump it, pay a $3K fine, and give the worker a $6K raise in pay and the worker also gets a $6K subsidy from taxpayers to buy health insurance and he only pays $4k out of pocket more than he used to pay for care, then the worker is better off and the company is better off. Only the taxpayer got burned. These companies >should< drop health insurance--keeping it hurts their bottom line (and hurts their workers).

But if the exchanges turn into a disaster and if waits for medical care in the exchange-price plans are excessive, then employers might gain a competitive advantage by offering workers a way out of the gulag.

 

[Mulligan]

Maybe, we'll see. The company will do whatever gives them the best return on the compensation they pay. If health insurance now costs them $10K per worker (after the tax benefits) and they can dump it, pay a $3K fine, and give the worker a $6K raise in pay and the worker also gets a $6K subsidy from taxpayers to buy health insurance and he only pays $4k out of pocket more than he used to pay for care, then the worker is better off and the company is better off. Only the taxpayer got burned. These companies >should< drop health insurance--keeping it hurts their bottom line (and hurts their workers).

But if the exchanges turn into a disaster and if waits for medical care in the exchange-price plans are excessive, then employers might gain a competitive advantage by offering workers a way out of the gulag.

Am I thinking correctly that a worker with a decent wage could get hammered pretty good under this scenario? Company does what you mentioned above. Except add these variables. 1. The workers pay was high enough for no subsidy. 2. Worker had been paying part of his healthcare premium out of pocket already and all his family. 3. If company dumped the insurance and the worker family gets pushed into the exchange program, won't they also lose a lot of money due to the fact they now cannot pay for their insurance with pretax dollars? Now I know many here including myself already have to do this, but for people who have not, this could also bring some budget shock to the family.

 

[Alan]

For the people who think that a large number of companies are going to drop health insurance because of Obamacare.... I just do not see it...

When I worked in the UK for a year, (back in 2000), companies were starting to offer health insurance to their workers.... and they have 'free' health care!!!

As long as it gives them a competative advantage (or to eliminate one from another company) to attract employees, they will offer these..

Remember that this in only health care... most large companies also offer dental, vision, STD, LTD, life, flex spending account, 401(k) with a match, sick leave and vacation time...

Now, smaller companies that have low paid employees probably do not offer these things at all and will have to make a decision on what to do.... but I think that any company that currently offers health care will not drop it to save money... heck, they never had to offer it at all and could have saved even more money, but did not...

+1

I had employer provided health insurance from 2 different companies in the UK that I worked for between 1979 and 1987. (then we moved to the USA)

Over time the nature of the HI offered may change, and it may be taxed just like other employee perks (company provided life insurance has been taxed for some years now).

 

[samclem]

Am I thinking correctly that a worker with a decent wage could get hammered pretty good under this scenario? Company does what you mentioned above. Except add these variables. 1. The workers pay was high enough for no subsidy. 2. Worker had been paying part of his healthcare premium out of pocket already and all his family. 3. If company dumped the insurance and the worker family gets pushed into the exchange program, won't they also lose a lot of money due to the fact they now cannot pay for their insurance with pretax dollars? Now I know many here including myself already have to do this, but for people who have not, this could also bring some budget shock to the family.

I don't think there will be many folks paying with pre-tax dollars anyway. But, your worker would at least get the higher pay. I think (without the govt subsidy) he'd do worse than if the company had kept the company-purchased insurance, but he'll do better than he was doing when he paid full freight and didn't get that $6k extra pay.
But, I think overall the company will still do whatever gives them the most bang-for-the-buck in attracting/keeping employees. Maybe the improvements the ACA brings is that lower-paid workers generally won't have employer-provided insurance (but they'll get more pay than otherwise and easier job mobility than today), while higher paid workers will generally have company insurance.
Like today.

 

[samclem]

It appears that another claimed benefit of PPACA is not working out as we all had hoped. The Pre-Existing Condition Insurance Plan (PCIP) is meant to allow those with health problems to buy medical insurance. The program had fewer enreolees than anticipated, but (like several other elements of PPACA) costs have exceeded projections and in mid February, the Center for Medicare and Medicaid Services (CMS) announced that the no further policies would be processed and they barred states from making new enrollments due to lack of funding.

GOP legislators have suggested that the President use funds from other portions of the PPACA package to continue funding of PCIP. If this is done, it might slow implementation of the "exchanges" in the states, particularly since so many will now be administered by the federal government rather than by the states themselves.

Here's the 05 March letter from GOP legislators to the President.
Here's a link to the Daily Caller article on the issue.

 

[Accidental Retiree]

That is my understanding too, but many retirees would have to increase their income by about $16K in order to get $12K after taxes to pay the premium up front.

For many, that would increase their MAGI and put them over the 400% limit.

Another good reason to have funds in after-tax accounts as well as in tax-deferred accounts, I guess.

 

[Live And Learn]

It appears that another claimed benefit of PPACA is not working out as we all had hoped. The Pre-Existing Condition Insurance Plan (PCIP) is meant to allow those with health problems to buy medical insurance. The program had fewer enreolees than anticipated, but (like several other elements of PPACA) costs have exceeded projections and in mid February, the Center for Medicare and Medicaid Services (CMS) announced that the no further policies would be processed and they barred states from making new enrollments due to lack of funding.

GOP legislators have suggested that the President use funds from other portions of the PPACA package to continue funding of PCIP. If this is done, it might slow implementation of the "exchanges" in the states, particularly since so many will now be administered by the federal government rather than by the states themselves.

Here's the 05 March letter from GOP legislators to the President.
Here's a link to the Daily Caller article on the issue.

Just what I needed - another excuse to w*rk OMY