When President Obama won re-election last November, it all but guaranteed that The Affordable Care Act (commonly referred to as Obamacare) was here to stay. I previously wrote what you need to know about the new healthcare law, but wanted to talk today about some possible unforeseen side effects, including losing healthcare.
Potential Ways Of Losing Healthcare
Employers Not Offering Healthcare
For as long as I can remember, healthcare was a benefit that many employers offered to their workers. The only times you didn’t receive coverage were if you worked part-time or were a contract employee. But with The Affordable Care Act, employers can choose to pay a penalty and not offer you healthcare. In the initial year of the law, the penalty is $2,000 per worker. This assumes that the employer has over 50 employees. In addition to this, the first 30 employees are not counted in the penalty.
To clear this up, let’s say an employer has 75 workers and chooses to not offer health insurance. The penalty would be: 75 – 30 = 45 x $2,000. The answer is $90,000. That sounds like a steep penalty. But it really is not. Where I work, the company pays 100% of my health insurance for me, meaning I do pay a monthly premium out of my paycheck. The cost of the insurance for me, an early 30’s healthy male: $17,000 per year. My employer would save $15,000 by no longer offering me health insurance.
When you do the math, it makes sense for many companies to drop health insurance for their employees. Before you think that they wouldn’t do that, remember that most companies are focused on the bottom line – meaning doing what it takes to cut costs. The Congressional Budget Office (CBO) estimates that over 7 million people will no longer be offered health insurance from their employer. In other words, they will be losing healthcare coverage.
Spouses and Families Not Covered
It’s been common for a husband and a wife to compare health insurance offered by their respective employers and then decide which plan works best for them. I have a friend that does not have health insurance from his employer because his wife’s plan is better. But, this may be coming to an end.
With The Affordable Care Act, there is a new fee that has to be paid “per life”, or per user. At first, the fee is a measly $1, but the fee jumps to $64 the next year. There is no estimate as to what it will be after that. Many employers will begin to question the benefit of offering family coverage once this added fee gets high enough. Don’t be surprised in a few years if you see your employer changing up its health plans for family coverage.
Many businesses are changing up their scheduling because of The Affordable Care Act. If a business has 50 or more employees, they must pay for health insurance or pay a fine. As I mentioned above, many companies will forgo the coverage and pay the fine. But what about businesses that don’t typically offer health insurance, like fast-food restaurants? They are taking a different approach since most of their employees are part-time: they are cutting hours. By keeping employees working less than 30 hours, the business does not have to offer health insurance.
While many fast-food establishments are large companies, you have to remember that each location is an independent franchise. Therefore, the majority of their employees are part time workers. By making certain that no one works over 30 hours per week, they can avoid the added cost of providing health insurance for their workers.
Overall, there are some good things and some bad things that may come out of The Affordable Care Act. Losing healthcare is just one issue. It really is too early to tell how the issues will play out. But you can be certain that there are portions of the law that are going to affect you in some way considering it is over 1,000 pages in length.