The year 2016 is the beginning of a new stage for the Affordable Care Act (ACA), better known as Obamacare. Employers with more than 50 employees must provide health insurance. The employer has the option to pay or play; that is not to offer any benefits and just pay the fine for non-compliance of the law. The fine is 2,000 dollars per employee yearly, which means that if the employer has 65 employees; the government lets them exclude the first 30 of them. It is like saying that the first 30 are free. That would leave us with the 35 remaining employees who would sum up a fine of $ 70,000 dollars per year, and that fine is not deductible. The employer may decide to put in place a plan that is very expensive, in the expectation that it would diminish the employee’s voluntary participation to lower his cost.
The employees must be aware that once the employer offers an insurance plan, the employee cannot participate in the Obamacare subsidies. Except; in the case that the employee’s participation cost is more than 9.5% of their income. If that was the case the employee could participate in federal subsidies and the employer would be fined $ 3,000 per year per employee, which is not an attractive alternative. There are many plans that can be created to satisfy all parties involved, employer or employee. Among them are the so called Skinny Plans which are less costly but offer fewer benefits. Defined contribution plans are gaining popularity at this time; could be a sound alternative. I will be going into more detail of these plans in my next edition.
