Why ObamaCare May Kill Jobs For Older Low-Wage Workers

Starting January 1st, 2015 the employer mandate of ObamaCare went into effect.  For those who don't know, this is a requirement that a business with 50 or more full time workers -- those working 30 hours or more a week -- offer health insurance to its employees and their dependents.  Dependents, as defined by the law, are children and not spouses.   Further, if an employee's total household income is between 100 and 400% of the poverty level, the employee cannot be charged any more than 9.5% of their income for coverage.  Therefore, for the first time in U.S. history, employers are required to ask for an employee's spouse's salary so they can determine how much they will have to pay for their insurance.  Also, if the employer fails at any of the above, a $2000 annual fine (tax) will be imposed for every employee at the business.

The way health insurance works, the younger healthier insured pay less than the older and potentially more costly.  Women, too, are more expensive to cover because of different health examinations and the potential of pregnancy. When a company needs to establish a group plan, the contracted insurance company needs to know all it can about the sex and age of the insured.  Some might require an annual physical paid by the employer before the cost of their insurance can be determined.

Companies are going to find out that having too many low-paid, older workers is going to cost them money.   For example, a single employee aged 55, and making less than $30,000 would have the 9.5% rule applied.  While a single person in their twenties might only cost $1500 a year to insure, this 55-year-old would cost at least $4,300.  In that case, the employer would be on the hook for $1,450 of it; and the employee would pay $2,850.  Whereas the young 20-something would not be subsidized at all.  Of course, this assumes that the company achieve that low of a cost to insure a 55-year-old.  Chances are, the smaller the company, the higher the cost of per employee insurance.  So, they could be on the hook for double or even triple that $1,400.

The fact is simple.  Employers now have an incentive not to hire or keep older, low-income workers. Another unintended consequence of such a wide sweeping law.

References:

Employer Mandate: https://www.uschamber.com/health-reform/employer-mandate

Health Insurance Coverage for 50- to 64-Year-Olds - AARP: http://www.aarp.org/content/dam/aarp/research/public_policy_institute/health/Health-Insurance-Coverage-for-50-64-year-olds-insight-AARP-ppi-health.pdf

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