Tuesday, July 16, 2013

Upon Further Review of the ACA Delays: the Synthesis of No Employer Mandate, No Employer Verification Mechanism, No Income Verification and the Use of Exchanges.

“That extra cash will subsidize coverage for workers without requiring an employer contribution, at least temporarily. It will make it easier for enrollees to understate their income to get subsidies that are richer — much richer in some cases. And it will enable modest-income families and poor adults who were supposed to be cut off from subsidies to access federal help.

By suspending many of the least popular features for a year or more, ObamaCare's cost is likely to be significantly higher; public support may be temporarily supported as well.

Modest-income families are among those that get the rawest deal from ObamaCare. If a spouse is offered individual coverage by an employer that meets the law's affordability test of 9.5% of household income, then the other spouse and their children are ineligible for exchange subsidies.”

“Under ObamaCare's official rules, such families might be better off financially if they earned less. The law's "family penalty" now won't be a concern for 2014.

Friday's release from the Department of Health and Human Services said that state exchanges may take an applicant's word regarding the availability of affordable employer coverage.

This follows logically from Tuesday's announcement that employer reporting requirements about each worker's access to health insurance would be suspended for 2014. No reporting requirements, no fines.”

“Considering ObamaCare's complex rules that deem unaffordable employer coverage for families "affordable," it's only logical that many families will sign up for subsidies who weren't supposed to be eligible.

Friday's release also gave state exchanges temporary leeway to apply
the honor system to enrollees when it comes to reporting their income.

This is key because exchange subsidies can differ greatly for households separated by a few thousand dollars in income. In fact, the lower-earning household might be better off under ObamaCare after factoring in lower taxes, bigger premium subsidies and far-lower deductibles.

For example, a couple earning $30,000 might face a $300 deductible, thanks to cost-sharing subsidies, while one earning $32,000 could face a $3,500 deductible, according to one estimate provided to Kaiser Family Foundation by Towers Watson.”

“The delay of the employer mandate also will at least temporarily smooth over two additional ObamaCare cliffs: the 49-worker firm and the 29-hour workweek.

For employers with 49 full-time-equivalent workers (based on hours worked, not just headcount), the 50th worker for firms that do not carry health coverage would carry a $40,000 penalty.

Firms that do offer coverage which is either too pricey for some workers or not deemed comprehensive enough would owe $3,000 for each full-time worker who gets ObamaCare subsidies. Because the fine is nondeductible, it would equate to $5,000 in deductible wages for a profit-making firm facing a 40% federal and state tax rate.

Because that annual fine would be imposed for a worker clocking 30 hours per week, but not for one who puts in 29 hours, it would equate to a wage hike of $96.15 per hour.

Thus, the 30-hour workweek is likely to last only as long as the employer mandate is delayed.

The Congressional Budget Office has projected that the employer mandate would raise $10 billion in fiscal 2015, starting October 2014. That doesn't include any extra subsidy costs due to the mandate's temporary absence.

House Budget Committee Chairman Paul Ryan, R-Wis., has asked the CBO to recalculate the health law's budget impact as a result of the administration's changes.” - Smoothing ObamaCare's Transition Will Cost Billions, Jed Graham, IBD, 07/08/2013

Upon further review, by not requiring the employer mandate until 01/01/2015 then the “individual coverage by an employer that meets the law's affordability test of 9.5% of household income” is not in play meaning a worker could easily go to the exchange with family in tow and receive a subsidy for himself/herself as well as the remainder of the family by indicating the employee‘s coverage does not meet the affordability test of 9.5%. No mechanism is in place to verify the claim. If the mandate was in effect and the employer did in fact meet the 9.5% mandate and the verification mechanism was in place, then the remainder of the employees family would not qualify for subsidies through the exchange.

If the employee were to fudge in order to maximize a reduction in price for the entire family’s health insurance cost and hence seek out the exchange and maximum subsidy, then increased subsidies occur. The subsidy and potential increase in subsidy is taxpayer funds therefore increasing the need for taxpayer revenue to fund the increased subsidies.

The entire article from Investor’s Business Daily appears in the link below:


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