Who "pays" the ACA fine- me or my employees?

[mirage62 0]

We’ve had a good discussion at my company, next year we are going to review where the ACA is at and we MAY elect to discontinue providing health care.

We would in effect give the employee the current money that we use to pay for the current health care ($432.00 per month) and let them buy their on ACA insurance.

Issue – while I am not at 50 now if I am….. would I subtract the “fine” that I would be charged from the amount I would give to the employee? I believe it is $2,000 per uninsured employee.

In effect $432 x 12 = $5,184. – fine $2,000 = $3,184 /12 mo = $265.33 left for them to purchase insurance.

This is not an attempt to piss about the ACA it is a real decision that I may have to face next year. It’s easy for some to say “just pay the fine” – that would be about $100,000. I believe in providing insurance but I don’t think it’s unreasonable to pay for the insurance effectively by giving them the raise AND pay the fine.

What say you?

Kevin Keenan is my hero, a double FUP, he does so much with so little

[DrewEckhardt 0]

mirage62

We’ve had a good discussion at my company, next year we are going to review where the ACA is at and we MAY elect to discontinue providing health care.

We would in effect give the employee the current money that we use to pay for the current health care ($432.00 per month) and let them buy their on ACA insurance.

Issue – while I am not at 50 now if I am….. would I subtract the “fine” that I would be charged from the amount I would give to the employee? I believe it is $2,000 per uninsured employee.

Nope. The competitive (versus other employers who'll keep providing insurance) and fair thing to do is keep paying the employees what it takes to get them $432 worth of insurance with the same take-home pay left.

If you don't buy the insurance you need to add what it'll take to cover the $432 plus taxes.

Here in California for a middle class person that would take

$432 / (1 - .28 federal tax - .062 FICA - .0145 Medicare - .093 California state tax - .01 California SDI) = $799.70

plus what you'll spend on your share of payroll taxes

$799.70 * (1 + .062 FICA + .0145 Medicare) = $860

which is nearly twice as much totaling $5136 a year more. You spend far less on the same value compensation package by providing insurance. Astute readers and cynics would be correct pointing out how the health insurers have kept the laws favorable to their industry.

I've assumed that your employees aren't earning more than the Social Security and SDI wage caps which lessens the impact because in the market for those sorts of employees insurance coverage is universal and you couldn't get away with no insurance. Some companies there even use 0 deductible, 0 out of pocket plans as a recruiting tool.

I've also assumed they won't be getting any help from the government because
1. Health insurance usually goes with jobs that require skilled labor like that requiring a college degree

2. The cut-off for government assistance to a single person is about 2/3 of the average salary for college educated people. Skilled trades people bill at comparable rates so I'd speculate they get paid about as well, although the government makes it hard to find numbers by lumping such people into the broad "completed highschool" category with average pay skewed by janitors and burger flippers.

If you want to cut spending do everyone a favor and switch to a High Deductible Health Plan where premiums are still paid before the government takes a huge tax bite and employees can use a Health Savings Account with the same tax treatment. For legal purposes this means a $1200 minimum annual deductible and $6050 out of pocket maximum for individuals and twice that for families. Increased deductibles and co-insurance maximums which don't cross that threshold preclude getting an HSA so the math may not work - while you can cover planned expenses like prescriptions via a Flexible Spending Account, that's use it or loose it within one plan year so it doesn't work well to cover unplanned expenses where you want to save towards the coinsurance maximum over a period of relatively healthy years. Some companies use HDHPs and make contributions to the employees HSA accounts which can combine lower payroll spending with more money left for employees after they pay for healthcare.

People have an emotional reaction to "high deductible" although in most cases when you run the math (ACA lets insurers mark up the medical care they provide by 25% for small group plans) the total cost for healthcare can be less.

At one employer I got a choice between two deductible levels, and by picking the higher one with the difference in premiums going into a FSA (spend it annually or loose it) I effectively eliminated the deductible and dropped my out-of-pocket costs.

You could also give the employees more freedom in how they do their jobs (work when they want, sub-contract, use equipment of their choice, etc.) so the IRS doesn't consider them employees for tax purposes (just calling someone a contractor does not make it so and the government then gets mad that you've not paid your share of payroll taxes), make them contractors, and spend what you do now.

You won't have to pay a fine if you grow because they won't be employees, and your contractors will be able to take an above-the-line deduction for health insurance premiums since they're self-employed.

[mirage62 0]

Thanks for the well thought out reply.

I'm not attempting to cut expenses, I sure don't want them to go up though.

Thanks again

Kevin Keenan is my hero, a double FUP, he does so much with so little

[wayneflorida 0]

DrewEckhardt

***We’ve had a good discussion at my company, next year we are going to review where the ACA is at and we MAY elect to discontinue providing health care.

We would in effect give the employee the current money that we use to pay for the current health care ($432.00 per month) and let them buy their on ACA insurance.

Issue – while I am not at 50 now if I am….. would I subtract the “fine” that I would be charged from the amount I would give to the employee? I believe it is $2,000 per uninsured employee.

Nope. The competitive (versus other employers who'll keep providing insurance) and fair thing to do is keep paying the employees what it takes to get them $432 worth of insurance with the same take-home pay left.

If you don't buy the insurance you need to add what it'll take to cover the $432 plus taxes.

Here in California for a middle class person that would take

$432 / (1 - .28 federal tax - .062 FICA - .0145 Medicare - .093 California state tax - .01 California SDI) = $799.70

plus what you'll spend on your share of payroll taxes

$799.70 * (1 + .062 FICA + .0145 Medicare) = $860

which is nearly twice as much totaling $5136 a year more. You spend far less on the same value compensation package by providing insurance. Astute readers and cynics would be correct pointing out how the health insurers have kept the laws favorable to their industry.

I've assumed that your employees aren't earning more than the Social Security and SDI wage caps which lessens the impact because in the market for those sorts of employees insurance coverage is universal and you couldn't get away with no insurance. Some companies there even use 0 deductible, 0 out of pocket plans as a recruiting tool.

I've also assumed they won't be getting any help from the government because
1. Health insurance usually goes with jobs that require skilled labor like that requiring a college degree

2. The cut-off for government assistance to a single person is about 2/3 of the average salary for college educated people. Skilled trades people bill at comparable rates so I'd speculate they get paid about as well, although the government makes it hard to find numbers by lumping such people into the broad "completed highschool" category with average pay skewed by janitors and burger flippers.

If you want to cut spending do everyone a favor and switch to a High Deductible Health Plan where premiums are still paid before the government takes a huge tax bite and employees can use a Health Savings Account with the same tax treatment. For legal purposes this means a $1200 minimum annual deductible and $6050 out of pocket maximum for individuals and twice that for families. Increased deductibles and co-insurance maximums which don't cross that threshold preclude getting an HSA so the math may not work - while you can cover planned expenses like prescriptions via a Flexible Spending Account, that's use it or loose it within one plan year so it doesn't work well to cover unplanned expenses where you want to save towards the coinsurance maximum over a period of relatively healthy years. Some companies use HDHPs and make contributions to the employees HSA accounts which can combine lower payroll spending with more money left for employees after they pay for healthcare.

People have an emotional reaction to "high deductible" although in most cases when you run the math (ACA lets insurers mark up the medical care they provide by 25% for small group plans) the total cost for healthcare can be less.

At one employer I got a choice between two deductible levels, and by picking the higher one with the difference in premiums going into a FSA (spend it annually or loose it) I effectively eliminated the deductible and dropped my out-of-pocket costs.

You could also give the employees more freedom in how they do their jobs (work when they want, sub-contract, use equipment of their choice, etc.) so the IRS doesn't consider them employees for tax purposes (just calling someone a contractor does not make it so and the government then gets mad that you've not paid your share of payroll taxes), make them contractors, and spend what you do now.

You won't have to pay a fine if you grow because they won't be employees, and your contractors will be able to take an above-the-line deduction for health insurance premiums since they're self-employed.

Very good answer.

I might add your answer is the perfect reason for tax simplification.

Healthcare decisions made because of tax consequences.

[Andy9o8 2]

Hey! Instead of your idea, how about he just pays them the money in pre-tax dollars?

[mirage62 0]

Hey how about I just give them the money post taxed and let them make their ON health care decisions?
The more I think of that the more I am starting to like, strickly from the fact that I hate making these decisions.

The ACA is the law of the land and when it is all settled down - next year - they should have plenty of good, affordable choices.

And NO I'm not being a smart ass.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[DrewEckhardt 0]

mirage62

Hey how about I just give them the money post taxed and let them make their ON health care decisions?

Facing a $7,275 a year pay cut like that I'd start looking for work elsewhere.

My health plan paid for by pre-tax dollars runs $10,000 a year and I throw another $1,500 in a flexible spending account. With the governments' cut taken out of that $11,500 I'd only take home $7043. Having $11,500 to spend on my health care would take $18,775 which suggests such a move would be a $7200 pay cut.

If I made less and had to pay FICA and SDI on it that would be a $9776 pay cut.

Your employees might do the same if they can do arithmetic or later once they see the impact on their budget..

Quote

The ACA is the law of the land and when it is all settled dow - next year - they should have plenty of good, affordable choices.

And NO I'm not being a smart ass.

If they don't qualify for government subsidies their health care will become less affordable than it was before because they'll be buying individual plans which aren't allowed to exclude pre-existing conditions and have limits on the price difference between old and young peoples' premiums which are things that make group plans expensive, except they won't get the tax break which usually accompanies that.

[turtlespeed 226]

DrewEckhardt

If they don't qualify for government subsidies their health care will become less affordable than it was before because they'll be buying individual plans which aren't allowed to exclude pre-existing conditions and have limits on the price difference between old and young peoples' premiums which are things that make group plans expensive, except they won't get the tax break which usually accompanies that.

Not very affordable is it?

I'm not usually into the whole 3-way thing, but you got me a little excited with that. - Skymama
BTR #1 / OTB^5 Official #2 / Hellfish #408 / VSCR #108/Tortuga/Orfun

[kallend 2,150]

turtlespeed

***
If they don't qualify for government subsidies their health care will become less affordable than it was before because they'll be buying individual plans which aren't allowed to exclude pre-existing conditions and have limits on the price difference between old and young peoples' premiums which are things that make group plans expensive, except they won't get the tax break which usually accompanies that.

Not very affordable is it?

Mine is. Premium went down this year.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 23]

kallend

******
If they don't qualify for government subsidies their health care will become less affordable than it was before because they'll be buying individual plans which aren't allowed to exclude pre-existing conditions and have limits on the price difference between old and young peoples' premiums which are things that make group plans expensive, except they won't get the tax break which usually accompanies that.

Not very affordable is it?

Mine is. Premium went down this year.

when did you start hating the poor and the middle class

I know it has always been about you but sheesh John, show some compassion

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[turtlespeed 226]

kallend

******
If they don't qualify for government subsidies their health care will become less affordable than it was before because they'll be buying individual plans which aren't allowed to exclude pre-existing conditions and have limits on the price difference between old and young peoples' premiums which are things that make group plans expensive, except they won't get the tax break which usually accompanies that.

Not very affordable is it?

Mine is. Premium went down this year.

Yeah . . . and you needed that to happen right? You were so strapped and could barely pay your mortgage.

Meanwhile the people that are struggling, you know, the ones that this was SUPPOSED to help, it fucks right in the asswallet.

I'm not usually into the whole 3-way thing, but you got me a little excited with that. - Skymama
BTR #1 / OTB^5 Official #2 / Hellfish #408 / VSCR #108/Tortuga/Orfun

[mirage62 0]

Quote

If they don't qualify for government subsidies their health care will become less affordable than it was before because they'll be buying individual plans which aren't allowed to exclude pre-existing conditions and have limits on the price difference between old and young peoples' premiums which are things that make group plans expensive, except they won't get the tax break which usually accompanies that.

None of my employees would qualify for subsidies.

You very well may move to another job, I wouldn't blame you. Maybe some of mine would. I don't think so

Your example though lacks all the savings that the ACA will bring and I wouldn't do this for a year.

Plus it reads like you have a pretty good plan.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[turtlespeed 226]

mirage62

Your example though lacks all the savings that the ACA will bring and I wouldn't do this for a year.

Thats funny right there -0 I don't care who you are - that there is funny!

I'm not usually into the whole 3-way thing, but you got me a little excited with that. - Skymama
BTR #1 / OTB^5 Official #2 / Hellfish #408 / VSCR #108/Tortuga/Orfun

[mirage62 0]

Quote

Mine is. Premium went down this year.

John is one of the "Older people" who:
1. Actual got on line.
2. Found a better and cheaper policy.
3. Was able to actually purchase the policy
4. AND the price was correct.

He makes #3 for the country..........and he CERTAINLY didn't need it with all the cool toys he has.

Kevin Keenan is my hero, a double FUP, he does so much with so little

[DrewEckhardt 0]

mirage62

Quote

Mine is. Premium went down this year.

John is one of the "Older people" who:
1. Actual got on line.

Not necessarily. He just said that his insurance went down, not that he did better buying through the exchanges.

My group insurance went down due to my recent birthday (people my age are less expensive to insure than youngsters on the same plan) presumably because I'm no longer likely to spawn but am not yet old enough to suffer from expensive age-related infirmities.

John could be in a similar situation or be in a group plan with age-based pricing and be old enough that the 3:1 rule dropped his high rate.

[mirage62 0]

You'll be glad to know that the ACA plan WILL cover you "spawn" no matter your age.

..... And I know John and I can promise you that while practicing I'm sure he's up for ...... "Spawning" is prob. not in his plans!

Kevin Keenan is my hero, a double FUP, he does so much with so little