The Not-So-Affordable Care Act

After going through the Kaiser Family Foundation quiz on Obamacare, I was surprised to get 8 out of 10 questions right.  Though I was familiar with most of the questions asked, my understanding of Obamacare is at a basic level and I was interested in learning more about the law.  As I read several articles discussing Obamacare, I learned more about the effect that the law would have on businesses.

One article I found to be particularly informative was in the Politico. Here, the author discussed the implications of Obamacare on businesses of all sizes, focusing on small to mid-sized businesses.  The mandate for businesses with at least 50 full-time employees to offer coverage appears to be the biggest conversation topic that could affect hiring decisions for smaller companies.  Some companies are contemplating hiring more part-time workers, firing workers to be under the 50-employee requirement, or are hesitant to hire additional workers for fear of higher costs past the 50-employee threshold.

One factor that stood out to me was that the law does not let employers fully escape the mandate by hiring part-time workers, as the law applies to businesses with the equivalent of 50 full-time workers.  Additionally, a “full-time worker” is defined as working at least 30 hours a week, which is below the standard workweek of 40 hours.  This is significant in determining the full-time equivalent, and will affect small to mid-sized companies that traditionally employ mainly part-time workers, such as restaurants and retail stores.

A portion of Obamacare that I did not know about but is alarming is known as the “Cadillac Tax,” which is designed to discourage businesses from offering too much coverage to its employees.  Essentially there will be a 40 percent tax on insurers who provide coverage that is above $10,200 for individuals and $27,500 for families.  This cost will be pushed onto businesses that choose to provide great benefit plans.  This, to me, sounds counterintuitive, since Obamacare has been championed as providing more coverage to more people.  Though this part of the law does not take effect until 2018, businesses are very worried about it, since they don’t know what their healthcare costs will be in 2018 and could fall into the tax even if they are not offering overly lavish coverage.

Overall, the severity of the effect that Obamacare will have on businesses and the economy remain unclear, as businesses try to think of strategies that they will use to cut costs as much as possible.  One thing is for sure: change is coming; we just don’t know what kind of change.


3 comments on “The Not-So-Affordable Care Act

  1. I was surprised that a “full time employee” is one that works 30 hours a week, rather than the typical 40 hours a week workers.
    I had not heard of the “Cadillac Tax” until now. I am agree this is counterintuitive. Why would Obamacare discourage businesses to offer their employees the best, most inclusive plans?

  2. Yeah, I don’t understand the “Cadillac Tax” either. The only thing I can think as the reason for this is something similar to income taxes and that people with higher income pay a larger percentage. So in this case, would the assumption be that companies who are offering better insurance plans are making more money so they should be taxed more?

  3. I don’t get it much as policy.

    As progressive taxation, we often have policies that ask the wealthier to contribute more.Maybe it was a way to cover the subsidies and tax credits of the PPACA.

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