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Showing posts with label unaffordable. Show all posts
Showing posts with label unaffordable. Show all posts

Friday, October 19, 2012

Talking About 2014 ObamaCare Employer Taxes

I have been reviewing two ObamaCare employer taxes that are scheduled to kick-in in 2014. It’s more than a year away, but let’s say you call me and we meet for coffee. It’s a business meeting. With cheesecake.
I’ll start the conversation off:
Me:                  If an employer has enough employees, then the employer is expected to provide health benefits.
You:                 What constitutes “enough employees?”
Me:                  More than 50 full-time employees. Full-time is defined as 30 hours per week, by the way.
You:                 So if I have less than 51 full-time employees, I escape the tax?
Me:                  Yes.

You:                 What if I have more than 50?
Me:                  Depends.
You:                 On what?
Me:                  On whether any employee receives a government subsidy.
You:                 And I am supposed to know this how?
Me:                  Trust me, you’ll find out.


You:                 What if I have more than 50 employees but no one gets a subsidy?
Me:                  How did you accomplish that, Houdini?
You:                 All my employees have their insurance covered by their spouse.
Me:                  Congratulations, Harry.

You:                 What if one divorces and gets a subsidy?
Me:                  You have a problem.
You:                 What problem?
Me:                  Your penalty will be either $2,000 or $3,000, depending.
You:                 Depending on what?
Me:                  Depending on whether you offer no insurance or offer unaffordable insurance.
You:                 So if I offer no insurance it will cost me $3,000 multiplied by some number?
Me:                  No.
You:                 You are getting on my nerves.
Me:                  The penalty for not offering health insurance is $2,000.
You:                 Per employee?
Me:                  No. You get to exclude the first 30 employees.
You:                 Huh?
Me:                  I didn’t write this stuff.
You:                 Say I have 55 full-time employees. What is it going to cost me?
Me:                  (55 minus 30) times $2,000 = $50,000.    
You:                 What if I fire 5 employees?
Me:                  Then you meet the 50-employee limit and have no tax.
You:                 Seriously?
Me:                  Yep.
You:                 Even if an employee gets government subsidy?
Me:                  Did you ever work at Bain Capital?

You:                 What is this “unaffordable” insurance thing?
Me:                  If the insurance exceeds a certain percentage of the employee’s family income, then the insurance is deemed “unaffordable.”
You:                 What is that percentage, oh beacon of despair?
Me:                  9.5% of household income.
You:                 Household income, what is that?
Me:                  An easy answer would be to add the husband and wife’s income.
You:                 How am I to know the spouse’s income?
Me:                  Trust me, you’ll find out.
You:                 How?
Me:                  When the government notifies you about the subsidy.
You:                 I am really starting to dislike you.
Me:                  Hey, I’ve got feelings here.
You:                 So if I see to it that all my employee’s spouses are doctors and engineers, then I can avoid the penalty?
Me:                  You have escaped yet again, Harry.

You:                 Say that I don’t escape. What is my tax?
Me:                  Well, you get to do two calculations. You pay the lower number.
You:                 Are you charging me for this aggravation?
Me:                  Yes.
Me:                  The first calculation is to multiply every employee receiving a subsidy for your unaffordable insurance by $3,000.
You:                 Then what?
Me:                  You do the same calculation as if you offered no insurance at all.  You know, the $2,000 calculation.
You:                 Huh, what’s the difference?
Me:                  The $2,000 calculation excludes the first 30 employees. Then it is just multiplication.
Me (cont’d):    The $3,000 calculation counts only those employees receiving a subsidy.
You:                 So if I offer unaffordable insurance, but no one gets the subsidy, my tax is zero?
Me:                  I am in awe, Harry.

You:                 What if I set up two companies, with neither having more than 50 employees?
Me:                  They already thought of that angle. No go if the companies are related. You owning both makes them related.
You:                 What if I increase my portion of the insurance to, you know, keep it “affordable?”
Me:                  That would work.
You:                 I would have to reduce the actual salaries or eliminate bonuses and raises to make the numbers work.
Me:                  Were you grades too high for community organizing?
You:                 What are other companies doing?
Me:                  Depends on the company. Some companies are too large for the 50 employees to mean anything. Still… Did you hear about Darden Restaurants?
You:                 Darden is who?
Me:                  Think Red Lobster and Olive Garden.
You:                 Are you charging me by the word?
Me:                  I’ll ignore that. Anyway, according to the Orlando Sentinel the company intends to reduce its maximum schedule to 28 hours per week per employee in “selected” restaurants. They told the newspaper that this is "just one of the many things we are evaluating to help us address the cost implications healthcare reform will have on our business."
You:                 Wow, that seems harsh.
Me:                  Where do you have that money tree planted, exactly?

You:                 How does an employee get a subsidy, exactly? Is that what sets this whole thing off?
Me:                  By “whole thing” you mean “unaffordable?”                      
You:                 I am going to hit you.
Me:                  There are two conditions. We already talked about the first one: the 9.5% of household income.
You:                 You mean 9.5% of a number that I have no hope of knowing or finding out?
Me:                  Yep, that one.
You:                 Do I want to know the second one?
Me:                  If you want your head to blow off.
You:                 What…? You have to tell me now.
Me:                  The second condition is that your employee’s household income ….
You:                 Which I do not know, right?
Me:                  Right. Now continuing where I was …. Your employee’s household income must be less than 400% of the federal poverty level.
You:                 You said 400%. I thought accountants were supposed to be good with numbers.
Me:                  I am. And it’s 400%.
You:                 Seriously?
Me:                  You are way too sharp to ever be hired by CNN.
You:                 So… what is 400% for a husband and wife?
Me:                  Close to $90 grand.
You:                 $90 grand! I didn’t make that last year! Or the year before!
Me:                  Maybe you can qualify for the subsidy.
You:                 I think I am going to fire you as my CPA.