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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Showing posts with label employer mandate. Show all posts
Showing posts with label employer mandate. Show all posts
Thursday, July 30, 2015
Saturday, June 13, 2015
Strong Retail Sales Does Not Mean A Growing Economy
Last Thursday, the retail sales numbers saw a surge; prompting the news agency Reuters to state this:
The fact is, that American national retailers are suffering. Dozens of them are announcing store closures. CNBC predicted this a year-and-a-half ago with their story titled "A 'tsunami' of store closings expected to hit retail". Since that story was run, Radio Shack has announced the closure of 1784 stores due to bankruptcy. McDonald's is shuttering 700. The combined Office Depot/Office Max operation is closing 650 retail operations, and their chief competitor Staples, 225. Others include 200 Walgreens; 338 Wet Seal; 77 Sears; 100 Pier One's, 300 Deb Shops; 40 J. C. Penney's; and on and on with a list too long to enumerate (See References).
In addition, shopping malls are also shuttering their doors. Forbes is predicting 300 Mall closures in the next 10 years, mostly because they are losing their "anchor" stores like J.C. Penney, Sears, and Macy's. But, when a mall closes its doors, so do the dozens of small retail stores that probably won't survive without the large amount of foot traffic a mall provides.
We're six years passed the end of the Great Recession and we are seeing national chain store closures as if we were still in the midst of it; leaving us to question whether or not small local retailers are also closing at that same high rate.
I personally believe that "retail" is hitting the proverbial "brick wall". You have a consumer who has so little money to spend after necessities, that you would have to go back 20 years to see the real median household incomes this low.
Then, retail prices are being driven higher by a variety of factors. For starters, this is the first year that the employer mandate of ObamaCare kicked in. Thus large national chains are being forced to provide health care insurance or pay a fine of between $2000 and $3000 for each employee not properly covered. On top of that, liberal state legislators and city councils are raising the minimum wage. For example, California's minimum wage was raised to $9 this year; and will go to $10 as of January 1st. Additionally, President Obama, through executive order, is expected to force any employer, whose salaried workers make less than $52,000 a year, to pay overtime (time-and-a-half) when they work more than 40 hrs/wk..
The increase in retail sales is more about higher prices and not increased sales. Simply, the consumer is cash strapped and marginal retail operations are being forced to close their doors due to declining foot traffic.
References:
Strong U.S. retail sales boost growth outlook: http://www.reuters.com/article/2015/06/11/us-usa-economy-idUSKBN0OR1H720150611
A 'tsunami' of store closings expected to hit retail: http://www.cnbc.com/id/101353168
Store Closings Index 2015 of Largest US Brick-and-Mortar Retail Chains: http://retailindustry.about.com/od/USRetailStoreClosingInfoFAQs/fl/All-2015-Store-Closings-Stores-Closed-by-US-Retail-Industry-Chains_4.htm
Some 300 malls should close in the next decade: http://fortune.com/2015/01/28/2015-mall-outlook/
Real Median Household Income in the United States - FRED: https://research.stlouisfed.org/fred2/series/MEHOINUSA672N
ObamaCare Employer Mandate - ObamaCare Facts: http://obamacarefacts.com/obamacare-employer-mandate/
State Minimum Wages | 2015 Minimum Wage by State: http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx
White House plans to force business to pay more overtime: http://www.washingtonexaminer.com/white-house-plans-to-force-business-to-pay-more-overtime/article/2556692
U.S. retail sales surged in May as households boosted purchases of automobiles and a range of other goods even as they paid a bit more for gasoline, the latest sign economic growth is finally gathering steam.What I take issue with is the "finally gathering steam" statement. Quite simply, a retailer can have stronger sales, not just because of more foot traffic to their store, but also because they may have been forced to raise prices. If a retailer doesn't have enough sales to pay the bills, it will have no other choice but to close its doors. This is a reality that is growing in strength, and which, belies the "gathering steam" comment.
The fact is, that American national retailers are suffering. Dozens of them are announcing store closures. CNBC predicted this a year-and-a-half ago with their story titled "A 'tsunami' of store closings expected to hit retail". Since that story was run, Radio Shack has announced the closure of 1784 stores due to bankruptcy. McDonald's is shuttering 700. The combined Office Depot/Office Max operation is closing 650 retail operations, and their chief competitor Staples, 225. Others include 200 Walgreens; 338 Wet Seal; 77 Sears; 100 Pier One's, 300 Deb Shops; 40 J. C. Penney's; and on and on with a list too long to enumerate (See References).
In addition, shopping malls are also shuttering their doors. Forbes is predicting 300 Mall closures in the next 10 years, mostly because they are losing their "anchor" stores like J.C. Penney, Sears, and Macy's. But, when a mall closes its doors, so do the dozens of small retail stores that probably won't survive without the large amount of foot traffic a mall provides.
We're six years passed the end of the Great Recession and we are seeing national chain store closures as if we were still in the midst of it; leaving us to question whether or not small local retailers are also closing at that same high rate.
I personally believe that "retail" is hitting the proverbial "brick wall". You have a consumer who has so little money to spend after necessities, that you would have to go back 20 years to see the real median household incomes this low.
Then, retail prices are being driven higher by a variety of factors. For starters, this is the first year that the employer mandate of ObamaCare kicked in. Thus large national chains are being forced to provide health care insurance or pay a fine of between $2000 and $3000 for each employee not properly covered. On top of that, liberal state legislators and city councils are raising the minimum wage. For example, California's minimum wage was raised to $9 this year; and will go to $10 as of January 1st. Additionally, President Obama, through executive order, is expected to force any employer, whose salaried workers make less than $52,000 a year, to pay overtime (time-and-a-half) when they work more than 40 hrs/wk..
The increase in retail sales is more about higher prices and not increased sales. Simply, the consumer is cash strapped and marginal retail operations are being forced to close their doors due to declining foot traffic.
References:
Strong U.S. retail sales boost growth outlook: http://www.reuters.com/article/2015/06/11/us-usa-economy-idUSKBN0OR1H720150611
A 'tsunami' of store closings expected to hit retail: http://www.cnbc.com/id/101353168
Store Closings Index 2015 of Largest US Brick-and-Mortar Retail Chains: http://retailindustry.about.com/od/USRetailStoreClosingInfoFAQs/fl/All-2015-Store-Closings-Stores-Closed-by-US-Retail-Industry-Chains_4.htm
Some 300 malls should close in the next decade: http://fortune.com/2015/01/28/2015-mall-outlook/
Real Median Household Income in the United States - FRED: https://research.stlouisfed.org/fred2/series/MEHOINUSA672N
ObamaCare Employer Mandate - ObamaCare Facts: http://obamacarefacts.com/obamacare-employer-mandate/
State Minimum Wages | 2015 Minimum Wage by State: http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx
White House plans to force business to pay more overtime: http://www.washingtonexaminer.com/white-house-plans-to-force-business-to-pay-more-overtime/article/2556692
Wednesday, April 22, 2015
Will Your Spouse Lose Their Health Insurance Because Of ObamaCare?
As of January 1st, the Employer Mandate of the Affordable Care Act went into effect. Any company with at least 100 full time employees must now offer health insurance to at least 70% of their employees in 2015. At least 95% in 2016. Otherwise, the company will face fines of $2500 per uninsured employee. Also, by the first of next January, any company with 50 or more full time employees must also provide their insurance or face the same penalties.
In addition to providing the insurance, there are other caveats that employers must meet. The insurance must meet minimum standards under the ObamaCare law, such as providing free birth control, one free annual doctors checkup, free screenings for a variety of illnesses, etc. Also, it must be affordable. By that, the employee's cost must be less than 9.5% of their gross wages, and the policy must also cover an employee's dependents up to the age of 26.
Now, those are the rules and here are the problems.
Marginally profitable and unprofitable firms may just go belly up. The ObamaCare employer mandate makes no exception for struggling companies. Either provide the insurance or pay the fine. Some businesses simply won't survive that. Most struggling companies cannot afford to raise prices in order to cover the high cost of health insurance. Also, as a result, the cost of starting a business has just gotten a lot more expensive.
Companies may lower their costs of providing insurance by not covering spouses. The Employer Mandate says that companies must provide insurance to dependents up to the age of 26. But, interestingly, a spouse is not considered a dependent under the new healthcare law. This actually gives companies an excuse for not covering them.
Low wage employers are disproportionately punished by the law. Before ObamaCare, most employers offered insurance to their employees on a cost sharing basis of about 50%. In other words, the employer would typically pay 50% of an insurance bill that, today, is in excess of $6,000 a year per single employee or more than $16,000 for a family. Today, there is the affordability rule. At a maximum of 9.5% of salary, a minimum wage worker should only have to pay $1,254 for insurance on the basis of an annual salary of $13,200; leaving the company to pick up the remaining cost of more than $4700 for a $6,000 insurance policy. On the other hand, if an employee makes $40,000, the employer might only be on the hook for a maximum of $2,200.
Some companies may rather pay the fine than pay for insurance. In the example above, a company faced with paying more than $2500 per employee may just find it cheaper to pay the fine and force a formerly insured employee to purchase their own insurance.
The Employer Mandate will reduce federal and state income tax revenues. Providing health insurance is a taxable deduction. So, every dollar a company pays to provide insurance, has their tax bill reduced by that same amount.
We will all pay billions in higher prices. The cost of providing employer-based insurance is certain to show up in the cost of much of what we buy. There's a difference between an employee paying for their own insurance or having the company pay for it. In other words, we will end up footing the bill through raised prices.
References:
ObamaCare Employer Mandate: http://obamacarefacts.com/obamacare-employer-mandate/
Employers Adjust Health Benefits for 2015: http://www.shrm.org/hrdisciplines/benefits/articles/pages/2015-health-benefits.aspx
7 Trends in Employer Health Benefits: http://www.shrm.org/hrdisciplines/benefits/articles/pages/2015-health-benefits.aspx
2014 Employer Health Benefits Survey: http://kff.org/health-costs/report/2014-employer-health-benefits-survey/
Obamacare and the Employer Mandate: Cutting Jobs and Wages: http://www.heritage.org/research/reports/2011/01/obamacare-and-the-employer-mandate-cutting-jobs-and-wages
The Obamacare Mandate Is Still Bad News For Employers: http://www.usnews.com/opinion/economic-intelligence/2014/03/10/the-obamacare-mandate-is-still-bad-news-for-employers
In addition to providing the insurance, there are other caveats that employers must meet. The insurance must meet minimum standards under the ObamaCare law, such as providing free birth control, one free annual doctors checkup, free screenings for a variety of illnesses, etc. Also, it must be affordable. By that, the employee's cost must be less than 9.5% of their gross wages, and the policy must also cover an employee's dependents up to the age of 26.
Now, those are the rules and here are the problems.
Marginally profitable and unprofitable firms may just go belly up. The ObamaCare employer mandate makes no exception for struggling companies. Either provide the insurance or pay the fine. Some businesses simply won't survive that. Most struggling companies cannot afford to raise prices in order to cover the high cost of health insurance. Also, as a result, the cost of starting a business has just gotten a lot more expensive.
Companies may lower their costs of providing insurance by not covering spouses. The Employer Mandate says that companies must provide insurance to dependents up to the age of 26. But, interestingly, a spouse is not considered a dependent under the new healthcare law. This actually gives companies an excuse for not covering them.
Low wage employers are disproportionately punished by the law. Before ObamaCare, most employers offered insurance to their employees on a cost sharing basis of about 50%. In other words, the employer would typically pay 50% of an insurance bill that, today, is in excess of $6,000 a year per single employee or more than $16,000 for a family. Today, there is the affordability rule. At a maximum of 9.5% of salary, a minimum wage worker should only have to pay $1,254 for insurance on the basis of an annual salary of $13,200; leaving the company to pick up the remaining cost of more than $4700 for a $6,000 insurance policy. On the other hand, if an employee makes $40,000, the employer might only be on the hook for a maximum of $2,200.
Some companies may rather pay the fine than pay for insurance. In the example above, a company faced with paying more than $2500 per employee may just find it cheaper to pay the fine and force a formerly insured employee to purchase their own insurance.
The Employer Mandate will reduce federal and state income tax revenues. Providing health insurance is a taxable deduction. So, every dollar a company pays to provide insurance, has their tax bill reduced by that same amount.
We will all pay billions in higher prices. The cost of providing employer-based insurance is certain to show up in the cost of much of what we buy. There's a difference between an employee paying for their own insurance or having the company pay for it. In other words, we will end up footing the bill through raised prices.
References:
ObamaCare Employer Mandate: http://obamacarefacts.com/obamacare-employer-mandate/
Employers Adjust Health Benefits for 2015: http://www.shrm.org/hrdisciplines/benefits/articles/pages/2015-health-benefits.aspx
7 Trends in Employer Health Benefits: http://www.shrm.org/hrdisciplines/benefits/articles/pages/2015-health-benefits.aspx
2014 Employer Health Benefits Survey: http://kff.org/health-costs/report/2014-employer-health-benefits-survey/
Obamacare and the Employer Mandate: Cutting Jobs and Wages: http://www.heritage.org/research/reports/2011/01/obamacare-and-the-employer-mandate-cutting-jobs-and-wages
The Obamacare Mandate Is Still Bad News For Employers: http://www.usnews.com/opinion/economic-intelligence/2014/03/10/the-obamacare-mandate-is-still-bad-news-for-employers
Wednesday, February 19, 2014
Latest ObamaCare Delay Confirms That The Healthcare Law Is A Job Killer
Ever since ObamaCare was passed into law, non-partisan economists have labelled it a job killer. In doing so, they point to the fact that employers can avoid any mandates and penalties by converting full time workers to part-time and by keeping the full-time staff under 49; a simple task if you are able to convert those employees to outside, contract labor. Other economists believe that struggling companies, unable to either provide insurance or pay the penalties, will have no other choice but to shutter their businesses. Others point to higher costs and new taxes associated with the law as potential drags on the economy with job losses to follow.
Those on the left have countered this by pointing back to the original Congressional Budget Office's analysis of ObamaCare which said that an insignificant amount of jobs (800,000) would be impacted: that being only one-half of one percent of the total workforce. Further, the proponents of the law have noted that the benefits to the overall economy would be greater than any small number of jobs being lost. Some even argued that it would actually create jobs.
Well, a funny thing happened on the way to rolling out ObamaCare last week. This time, in the 29th such delay, Obama told employers with 50-to-99 employees that their compliance with the law was delayed until January 1, 2016. Or, that's what most of the news media reported. What was little reported is that an employer has until that date to comply "as long as" that employer signs an affirmation, as part of each and every tax submission, that says that any changes they might have made in staffing were not a result of trying to avoid the mandates of ObamaCare. Otherwise, if they lied, they would be subject to both penalties and imprisonment for perjury under Federal law. Now, if that doesn't backhandedly scream proof of job-killing, I don't know what does!
Obviously, the delay and the associated "perjury" condition is intended to stop any further deterioration of the workforce in advance of the November elections. I'm quite sure that the President's economic advisers have told him things like, in the last year, 75% of the jobs being created were part-time. Or, that productivity has risen and unit labor costs have fallen to levels that haven't been seen since the last two recessions. Or, that the decline in retail sales is closely following the pattern that preceded the last great recession in late 2007.
Any way you shake it, the Presidents signature legislation is harming both the economy and jobs; and, this latest delay and that "affirmation" just proves it.
References:
Businesses must certify under penalty of perjury that job cuts aren’t Obamacare dodge: http://www.washingtontimes.com/news/2014/feb/11/businesses-must-certify-under-penalty-perjury-job-/
CBO: Healthcare to Shrink Workforce by 800,000: http://www.politico.com/news/stories/0211/49273.html
Chart: Productivity and Unit Labor Costs: http://www.briefing.com/Common/Images/Content/PageContent/EcData/prodann.gif
Chart: Retail Sales: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/02/Retail%20Sales%20Control%20Group_0_0.jpg
75% Of Jobs Created This Year Were Part-Time: http://jobs.aol.com/videos/business-economy/75-of-jobs-created-this-year-were-part-time/517905414/
pb
Those on the left have countered this by pointing back to the original Congressional Budget Office's analysis of ObamaCare which said that an insignificant amount of jobs (800,000) would be impacted: that being only one-half of one percent of the total workforce. Further, the proponents of the law have noted that the benefits to the overall economy would be greater than any small number of jobs being lost. Some even argued that it would actually create jobs.
Well, a funny thing happened on the way to rolling out ObamaCare last week. This time, in the 29th such delay, Obama told employers with 50-to-99 employees that their compliance with the law was delayed until January 1, 2016. Or, that's what most of the news media reported. What was little reported is that an employer has until that date to comply "as long as" that employer signs an affirmation, as part of each and every tax submission, that says that any changes they might have made in staffing were not a result of trying to avoid the mandates of ObamaCare. Otherwise, if they lied, they would be subject to both penalties and imprisonment for perjury under Federal law. Now, if that doesn't backhandedly scream proof of job-killing, I don't know what does!
Obviously, the delay and the associated "perjury" condition is intended to stop any further deterioration of the workforce in advance of the November elections. I'm quite sure that the President's economic advisers have told him things like, in the last year, 75% of the jobs being created were part-time. Or, that productivity has risen and unit labor costs have fallen to levels that haven't been seen since the last two recessions. Or, that the decline in retail sales is closely following the pattern that preceded the last great recession in late 2007.
Any way you shake it, the Presidents signature legislation is harming both the economy and jobs; and, this latest delay and that "affirmation" just proves it.
References:
Businesses must certify under penalty of perjury that job cuts aren’t Obamacare dodge: http://www.washingtontimes.com/news/2014/feb/11/businesses-must-certify-under-penalty-perjury-job-/
CBO: Healthcare to Shrink Workforce by 800,000: http://www.politico.com/news/stories/0211/49273.html
Chart: Productivity and Unit Labor Costs: http://www.briefing.com/Common/Images/Content/PageContent/EcData/prodann.gif
Chart: Retail Sales: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/02/Retail%20Sales%20Control%20Group_0_0.jpg
75% Of Jobs Created This Year Were Part-Time: http://jobs.aol.com/videos/business-economy/75-of-jobs-created-this-year-were-part-time/517905414/
pb
Wednesday, February 12, 2014
Sebelius: Delaying ObamaCare is Not an Option
In a PBS interview last November, Health and Human Services Secretary, Kathleen Sebelius, said this:
Apparently, cancer, diabetes, and Parkinson's will now have to wait after all until the Democrats are able to skate through the 2014 elections without all the problems of ObamaCare hanging around their necks. Obviously, the President's delay of all the insurance-killing and job-killing aspects of his health care reform completely contradicts the expressed belief by the Democratic National Committee Chairman, Debbie Wasserman Schultz, that they will run on ObamaCare in 2014 and win.
One has to wonder. If it is so great for America, why should so much of it have to be delayed? After all, Sebellius told us that it wasn't an option.
References:
Kathleen Sebelius to Congress: Delay of health care law ‘not an option’: http://www.pbs.org/newshour/bb/government_programs-july-dec13-healthcare_11-06/
Employer Mandate Delayed Again: http://www.politico.com/story/2014/02/obamacare-employer-mandate-delay-103338.html
Wasserman Schultz: Democrats Will Win in 2014 Running on Obamacare: http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare
"Delaying the Affordable Care Act wouldn’t delay people’s cancer or diabetes or Parkinson. It doesn’t delay the higher cost all of us pay when uninsured Americans are left with no choice but to rely on emergency rooms for care. So, for millions of Americans, delay is not an option."Yet, just last weekend, another delay -- the 27th so far in less than a year -- was put in place. This time it again postpones the employer mandate for businesses with 50 to 100 employees until January 2016. Thui, conveniently avoids the onslaught of expected insurance cancellations that would have occurred during the run up to the 2014 elections as many employers might choose to pay the penalty versus providing insurance by the current January 1, 2015 deadline.
Apparently, cancer, diabetes, and Parkinson's will now have to wait after all until the Democrats are able to skate through the 2014 elections without all the problems of ObamaCare hanging around their necks. Obviously, the President's delay of all the insurance-killing and job-killing aspects of his health care reform completely contradicts the expressed belief by the Democratic National Committee Chairman, Debbie Wasserman Schultz, that they will run on ObamaCare in 2014 and win.
One has to wonder. If it is so great for America, why should so much of it have to be delayed? After all, Sebellius told us that it wasn't an option.
References:
Kathleen Sebelius to Congress: Delay of health care law ‘not an option’: http://www.pbs.org/newshour/bb/government_programs-july-dec13-healthcare_11-06/
Employer Mandate Delayed Again: http://www.politico.com/story/2014/02/obamacare-employer-mandate-delay-103338.html
Wasserman Schultz: Democrats Will Win in 2014 Running on Obamacare: http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare
Democratic
candidates will be able to run on ObamaCare as an advantage leading
into the 2014 election, - See more at:
http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare#sthash.6fH0XAgq.dpuf
Democratic
candidates will be able to run on ObamaCare as an advantage leading
into the 2014 election, - See more at:
http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare#sthash.6fH0XAgq.dpuf
Democratic
candidates will be able to run on ObamaCare as an advantage leading
into the 2014 election, - See more at:
http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare#sthash.6fH0XAgq.dpuf
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