Obamacare and Employees

For the past two weeks, I have written about the Affordable Care Act (ACA), or Obamacare, and how it affects large and small businesses. (Click here to view last week’s post.) I have also heard from several employees who are concerned about how this legislation will impact their lives. In truth, the law already has been in effect for over 3 years, but January 1, 2014 marks a new milestone in the way businesses and their employees are impacted. American workers are wondering if the cost of their health care premiums and coverage will go up as a result of this game-changing legislation.

Doctor_PatientWill your paycheck be affected?

Funding for all of the new expenses resulting from the ACA has to come from somewhere. Instead of increasing the deficit to fund the program, President Obama has introduced 21 new taxes; it’s estimated those taxes will negatively impact the incomes of only 2% of Americans, whereas 98% won’t see any change in their take-home pay. Click here for a full list of Affordable Care Act tax provisions.

However, on average, employers are expected to see a 6.5% rise in their rates from insurance companies, and that could create additional premiums for their employees. Obamacare forces insurance providers to offer coverage to all Americans, even those with pre-existing conditions, and those insurance companies may pass that increased expense onto employers. According to Mercer’s 2012 National Survey of Employer-Sponsored Health Plans, 58% of employers plan to pass a portion of their increases to their employees. It is at your employer’s discretion whether they will pass along that burden in some form or fashion; however, the Obama administration anticipates that benefits from the ACA will offset any reduction of income employees might see.

Will your coverage change?

The American Action Forum estimates that, under Obamacare, 35 million Americans will lose employer-sponsored health care coverage. Those employees will be forced into government-run exchanges, which the government is working to make affordable. The good news from just last week is that the exchanges may be even more affordable than previously thought. The Washington Post noted that the heavy competition among providers in California and Oregon is driving down costs to lower than what the Congressional Budget Office had anticipated. What plan you choose dictates what coverage you will have, which may or may not be different than what you were receiving previously.

Some Americans and their families will receive a tax break when purchasing their insurance plans through the exchange. The price for plans is capped at no less at 1.5% and no more than 12% of their income for health insurance premiums under the new law. The amount you will pay is determined using a sliding scale.

Health careIf your employer does not offer health insurance and you choose not to get an individual plan, you will be subject to a penalty of $95 or 1% of your income (whichever is greater) for noncompliance in 2014. Readers, you should expect this to rise in 2016 to $625 or 2.5% of income.

How should you prepare?

With all of the new laws, taxes, and regulations, it is important to plan ahead and prepare for the changes that are certain to take place. Your situation is likely to change in one way or another. You should start budgeting for an increase now, and be pleasantly surprised if it doesn’t come. If you have concerns over what will happen to your health care plan at your workplace, now is the time to have a conversation with your benefits administrator or human resources manager.

Readers, what are your employers doing to prepare for Obamacare in 2014? Have you developed a strategy of your own?

Best wishes,

Anita

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4 Comments (+add yours?)

  1. Irene DellaCorte
    May 30, 2013 @ 21:32:47

    I’ve already been impacted. I’m now part-time instead of full-time. Hard to afford anything. Now I’m doing the on-line looking for a job nightmare.

    Reply

  2. Jack Tracey
    May 30, 2013 @ 18:59:48

    @vmhayhurst — but you are ignoring the ones who did not — and the incredible cost savings that will result from the rates that have been released in California. Helps t have an aggressive insurance commissioner who won’t allow the insurance companies to run roughshod!

    Reply

  3. vmhayhurst
    May 29, 2013 @ 20:45:53

    Hi Anita, I am working on implementing the PPACA pay or play mandate into a large employer as we speak. The other thing to note is that employers are required to pay at least 60% of the cost share of the premium. I am getting somewhat concerned, however, that insurance providers will not enter the exchange arena in an effort to hobble the ACA. Three major players opted out this past week in California.

    Reply

  4. UttarRai
    May 28, 2013 @ 10:19:50

    I am looking for a job as I am hardworking and fast learner person.I wanna talk with you about the job.Thank you.

    Reply

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Disclaimer

Anita Clew's blog posts are intended for general guidance and should never be taken as legal advice. In all instances where harassment, inequity, or unfair treatment is believed to be present, please consult your HR Department or legal representation.
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