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Thursday, November 1, 2012

Employers and Obamacare: What it Means for You

Adapted from ObamaCare Survival Guide by Nick J. Tate

As the Affordable Health Care Act rolls out over the next year and beyond, we are finally learning the details of what ObamaCare means to working Americans.

First and foremost, the Internal Revenue Service (IRS) is the government agency that will oversee our new healthcare mandates. Employers are required to report to the IRS about each of their employees, and individuals will have to report to the IRS regarding health care insurance status.

Senior Citizens
It’s no secret that ObamaCare will be significantly funded by money cut from Medicare. The original projected cuts totaled $455 billion over the next decade. Since then, the Congressional Budget Office (CBO) has twice updated that figure. In 2011, the CBO’s estimated cuts were re-estimated to be $507 billion between 2012 and 2021. Then, in July 2012, the CBO projected Medicare outlays would be cut by about $716 billion between 2013 and 2022. That is $209 billion more in cuts than originally projected. However, ObamaCare does expand Medicare’s prescription drug coverage, and certain preventive care services. It also caps what insurers can charge older Americans.

Large Businesses - 25 or More Employees
From a cost perspective, ObamaCare has not been good for large companies as new mandates imposed on their health insurance providers have increased business operating costs. Many Americans are worried that ObamaCare will force their employer to drop their insurance since it may cost less for some businesses to simply pay the $2,000 fine per worker for not providing insurance. Some businesses need to offer benefits to attract workers, and some don't. If you work for a company that easily attracts workers, may be in greater danger of losing your coverage.
Also, large businesses will have to wait to be able to participate in health insurance exchanges, assuming it is granted to them at all. Each state will have to decide itself whether or not to let large businesses purchase insurance through its exchanges.

Small Businesses - 25 or Less Employees
These companies have suffered from rising healthcare costs in the past, but will benefit more from ObamaCare, especially in the short term. They will receive significant tax breaks and in 2014 they will have immediate access to health insurance through exchanges, unlike large businesses. However, if a small business exceeds 25 employees, they will receive no tax credits, and possibly no access to exchanges. For employees who work for small businesses with no insurance, ObamaCare is great news if their employer decides to take the generous tax credit. If small businesses do not participate, workers may be required to purchase insurance through a government-subsidized exchange, or face a fine.
Approximately 6% of businesses with employee payrolls are considered large businesses in America, yet over 175 million Americans work for a large business. Approximately 37 million Americans have no health insurance.

It is also interesting to note that fear of an acute doctor shortage, which existed prior to ObamaCare, may be exacerbated by the new law. With lower expected incomes and student loan debts that are the highest in the world, there could be far fewer doctors to provide health care.

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