Health Care Fiasco
http://www.heritage.org/Research/HealthCare/wm2716.cfm
Suppose you wanted to prevent single parents and people from lower-income families from getting a job. How about imposing a $3,000 tax penalty on any employer who hired such a person instead of an equally qualified, equally paid person from a higher-income family? Would that do the trick?
It would do the trick quite nicely--but since no decent person actually wants to make it hard to escape poverty, it's a really bad idea. But that is exactly what the Senate health care bill does.
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If a company hires "too many" employees who qualify for subsidies, it could be even worse for their co-workers who do not qualify. If at least one-quarter of employees qualify for the subsidy, the company will pay the same tax penalty regardless of whether or not it offers health insurance to its remaining employees--so it might as well drop the company health plan entirely. In that case, all workers would be required to purchase insurance on their own.
The end result could be financially devastating. Workers without the subsidy, instead of paying at most 40 percent of the cost of an employer-sponsored plan on a pre-tax basis, would have to pay 100 percent of the cost of a "qualified" plan in the new government-sponsored exchange (or remain uninsured and face tax penalties)--and in addition, will have to pay income and payroll tax on the entire premium.
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This means that if a company hired "too many" workers from low-income families, it could cost the other workers $12,000 to $20,000 or more per year.
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The following appears on pages 350-352 of the PDF version of the bill and amends chapter 43 of the Internal Revenue Code of 1986, Section 4980H(c) to read[7]:
(c) LARGE EMPLOYERS OFFERING COVERAGE WITH EMPLOYEES WHO QUALIFY FOR PREMIUM TAX CREDITS OR COST-SHARING REDUCTIONS.--
(1) IN GENERAL.--If--
(A) an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
(B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and 400 percent of the applicable payment amount.
(2) OVERALL LIMITATION.--The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
(d) DEFINITIONS AND SPECIAL RULES.--For purposes of this section--
(1) APPLICABLE PAYMENT AMOUNT.--The term 'applicable payment amount' means, with respect to any month, 1⁄12 of $750.
(2) APPLICABLE LARGE EMPLOYER.--
(A) IN GENERAL.--The term 'applicable large employer' means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.
Suppose you wanted to prevent single parents and people from lower-income families from getting a job. How about imposing a $3,000 tax penalty on any employer who hired such a person instead of an equally qualified, equally paid person from a higher-income family? Would that do the trick?
It would do the trick quite nicely--but since no decent person actually wants to make it hard to escape poverty, it's a really bad idea. But that is exactly what the Senate health care bill does.
...
If a company hires "too many" employees who qualify for subsidies, it could be even worse for their co-workers who do not qualify. If at least one-quarter of employees qualify for the subsidy, the company will pay the same tax penalty regardless of whether or not it offers health insurance to its remaining employees--so it might as well drop the company health plan entirely. In that case, all workers would be required to purchase insurance on their own.
The end result could be financially devastating. Workers without the subsidy, instead of paying at most 40 percent of the cost of an employer-sponsored plan on a pre-tax basis, would have to pay 100 percent of the cost of a "qualified" plan in the new government-sponsored exchange (or remain uninsured and face tax penalties)--and in addition, will have to pay income and payroll tax on the entire premium.
...
This means that if a company hired "too many" workers from low-income families, it could cost the other workers $12,000 to $20,000 or more per year.
...
The following appears on pages 350-352 of the PDF version of the bill and amends chapter 43 of the Internal Revenue Code of 1986, Section 4980H(c) to read[7]:
(c) LARGE EMPLOYERS OFFERING COVERAGE WITH EMPLOYEES WHO QUALIFY FOR PREMIUM TAX CREDITS OR COST-SHARING REDUCTIONS.--
(1) IN GENERAL.--If--
(A) an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
(B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and 400 percent of the applicable payment amount.
(2) OVERALL LIMITATION.--The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
(d) DEFINITIONS AND SPECIAL RULES.--For purposes of this section--
(1) APPLICABLE PAYMENT AMOUNT.--The term 'applicable payment amount' means, with respect to any month, 1⁄12 of $750.
(2) APPLICABLE LARGE EMPLOYER.--
(A) IN GENERAL.--The term 'applicable large employer' means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.