What do you think about companies discontinuing offering health insurance and paying the government penalty?

If it is true, which I doubt. but if it is true, the logical reason would be to save money. The health insurance, when Obamacare is fully implemented, is going to cost the employer more. The penalty will be less than the cost of the insurance.

Do companies get tax reliefs if they offer health benefits?

@bkcunningham I think it is absolutely to save money. That was part of the discussion at my husband’s company. What is odd is benefits are usually offered for competitive reasons. I think before they could have chosen not to offer benefits and there would not have been a penalty, before Obamacare. It doesn’t make complete sense to me.

@bea2345 Yes, if it is a certain type of health care option there is a tax benefit for the employer. It has always been that way. At least for a long time.

That is why I don’t believe it is true. I’ve heard companies will be cutting people to part-time. Only time will tell. Right now I think people are looking for ways to save because the economy is still in bad shape.

What type of tax benefit does an employer get for providing healthcare options? I’ve never heard that one either. Can you provide a link on that please?

I couldn’t find anything about Home Depot doing this, but I did find an article that talked about some other small businesses doing it. According to this article, the penalty is $2000 per full time employee. Depending on the number of employees and the cost of the benefit package, it could be cheaper to pay the penalty for many companies.

I know my employer is dropping their 100% coverage option for 2014. We have 4 levels of health insurance options, 2 that are 80/20 coverage, 1 90/10 coverage, and 1 100% coverage currently. The 100% one will be gone at the end of this year.

@bkcunningham If it is a benefits plan under section 125 of the IRS code.

Here is a list of benefits for Home Depot emloyees.

For companies who offer cafeteria plans?

@bkcunningham Yes, from what I understand some of the expenses paid by the company are tax deductible. I’ll try to find a link on it.

I typed too fast and hit answer before I meant to hit answer.

A tax benefit for the company or for the employee enrolled in a cafeteria plan?

We are small enough that we don’t HAVE to offer insurance but we do. We pay the entire premium for the employee. Our agent has told up that we will probably get a better price with the state exchange next year so we will probably pay for the employees to participate in the exchange.
To specifically answer your question, its probably some right wing protest.
If its true, Lowes will be getting my companies business from now on instead if Home Depot. Already go to Costco instead of SAMs Club because of how much better they treat their employees.

@bkcunningham It looks like the biggest tax benefit I can find having googled is the FICA payment saved by the employer on funds redirected by employee option to the tax exempt accounts. I don’t know of there are other benefits outside of that for the employer.

I read somewhere that health insurance rates in California are expected to raise nearly 17 percent in 2014 because of Obamacare.

@bkcunningham That’s what really should be addressed, health costs and the racket of the health care business. But, I’m going to refrain from going down that tangent and my rant that goes with it.

Does anyone know how health insurance became linked to employment? This has been the norm for decades—perhaps ever since the creation of medical insurance—and I’ve always wondered why. Should employers be expected to pay hefty insurance premiums in addition to salaries and wages? Should an employee be dependent on whatever coverage his boss provides (or doesn’t provide) and be left bare when he quits or loses his job?

It’s no big secret that this mess is uniquely American. I can only guess its history.

(1) Universal, public access to health care is “socialized medicine” and, thus, tantamount to communism.

(2) Maybe during some period of economic prosperity, when it was difficult to find good workers to fill jobs, employers started upping the ante and offering freebie health insurance to compete for employees.

@SadieMartinPaul I hate it, I hate that health care is attached to employment in our country. I once read that unions were the biggest influence on the American trend towards employers offering health care insurance. Supposedly, the auto unions lead the way. I don’t know if that is fact or not. Then the competitve nature of business added to the trend to compete for employees.

Medical insurance in the US was started by a Dr. Baylor for teachers who he noticed weren’t paying their bills. This grew into Blue Cross and Blue Shield. LOL A doctor started this whole mess. Imagine that.

@bkcunningham “A doctor started this whole mess.”

So, it all began with a doctor, and doctors perpetuated the so-called system for decades to follow. For so many years, private health insurance made physicians very wealthy. Now, a younger generation’s trying to practice medicine under a mountain of paperwork and in a labyrinth of private and public insurance providers, all while having to agree to accept small, arbitrary payments for their services.

@bkcunningham So, was it that the teachers unions fought for the government/employer to pay for the insurance? Or, offer it?

Do you mean after Obamacare is fully implemented, @SadieMartinPaul?

Teachers unions had nothing to do with the start of health insurance in America, @JLeslie.

Here’s a good brief history of health/medical insurance in America.

This history of HMO gives some info. It mentions Baylor. From what I understand, when the federal act for HMO’s passed back in the ‘70’s the people who pushed for it knew it would mean mega bucks for business and not be a great thing for the American public like it was pitched. Of course HMO is not the entire historical backgrouns to employer funded and offered medical insurance.

@bkcunningham Thanks for the link.

@JLeslie Have you heard the White House tapes of Richard Nixon agreeing to the earliest form of HMOs? He and his cronies discussed, blatantly and with no reservations, how HMOs would reap huge benefits for businesses under the guise of a good thing for consumers. So, the bad effects of HMOs weren’t something that developed over the years; they were known and intended from Day 1.

Labor laws in the US restricted how much employers could pay their employees, thus; they employers paid for their employees medical insurance as an incentive.

My husband just said that he doesn’t believe Home Depot will do it; will get rid of health care options for its employees. He says it’s gossip in the industry.

When I first heard it, I kind of was hoping they would and a lot of other employers would follow suite.

@bkcunningham What laws restricted how much could be paid to employees? Wages?

I should have added that during World War II to my fact above about the US government restricting wages and thus employers giving employees medical insurance as extra pay and incentives.

@bkcunningham, I live in California and our agent is even more right of you. He hates saying it because he hates Obama but he says we WILL save through the exchange.
Latest news shows it won’t be the train wreck naysayers have anticipated

I was reading your state’s Health Exchange information packet @Judi. They are basing their information on a study. It predicts worse than that for individuals who have their own insurance. Of course, like everything in life. There will be good and bad, according to the study.

“Individuals currently enrolled in an individual plan, but not eligible for a subsidy because their income is above 400 percent of the Federal Poverty Level (for example, more than $93,700 for a family of four or $45,960 for an individual) will likely see an average premium increase of about 30.1 percent. They can lessen the impact by choosing coverage that has higher limits on out of pocket spending, which means that many would be able to avoid these increases and pay lower premiums.”

How does the exchange work, @Judi? Will the coverage be comparable to what you have now for your employee? The deductible and out-of-pocket and premiums will be the same? The list of providers who accept the insurance? I wonder because we had it for some time here in Florida and it was horrible. A nightmare.

@bkcunningham “Labor laws in the US restricted how much employers could pay their employees”

What labor laws capped an employee’s compensation?

The National War Labor Board was created by President Roosevelt, by executive order on January 12, 1942. The Board was established to determine procedures for settling disputes that might affect war production. The Board had the options of offering mediation, voluntary arbitration, and compulsory arbitration to try to resolve controversies but had no power to enforce its decisions. It was also authorized to approve all wage increases, where the total annual remuneration was below $5,000. The Board quickly adopted the so-called Little Steel formula for war time wage changes, i.e., based on a 15-percent rise in living costs from January 1, 1941, to May 1, 1942. In September 1942, the President was given the authority to stabilize wages and salaries, based on September 15, 1942 levels.

As a result of wage restrictions, employers who needed to attract labor resorted to providing a growing range of fringe benefits, such as pensions, medical insurance, and paid holidays and vacations. These benefits were considered non-inflationary, as they were not paid in cash and, thus, did not violate the wage ceiling. Additionally, payments for overtime afforded extra income to workers, without violating the limits on hourly wage payments. During the late 1940s, fringe benefits became more common as part of settlements reached in collective bargaining.

On June 25, 1943, Congress passed the War Labor Disputes (Smith-Connally) Act that authorized the President to take over plants needed for the war effort or in which war production had ceased because of a labor dispute. These sanctions were effective against management but were not as effective against labor. Although strikes were prohibited during the War, they did occur.

Source

@bkcunningham Interesting. I’m so torn on this topic. I hate benefits through employers. Then there is the point made by Baylor that teachers were not paying. So then I am at socialized medicine, but people need to cough up the tax money.

In the end I am back at controlling health costs and putting a ceiling on profits. Some states have some laws for that.

It is interesting. It is an amazing piece of history.

If you get an opportunity, watch these videos.

The issue is cost. Insurance premiums are rising at an alarming rate. Whether you blame Obamacare for the rise doesn’t matter, they’re rising fast. Employers are looking for a way to control that cost. If they can pay the penalty and add any additinal saving to your paycheck, you can get the insurance from an exchange and have some of it subsidized by the government. The employer saves money and the employee saves money. And as an added benefit, the employer no longer has to deal with all the insurance contracts, annual negotiations and individual benefits haggling.

It’s a shame Obama wouldn’t even consider some of the proposals that might have actually curtailed some of the price escalation. Interstate competition could only have helped and tort reform is badly needed. alas and alack, it is all water over the dam at this point. We have what we have and both business and workers are trying to make the best of it, even if the best is quite poor.

I just don’t understand how people can say that mandated insurance is going to cost more. More healthy people will be covered so the per capita cost will drop. There are also limits on insurance profits with provisions to insure that excess profit goes back into the plan.

There is no downside to Obama Care except for the naysayers that will reject any plan supported by a president that isn’t lily white.

More healthy people will be covered? @Ron_C, I thought one of the arguments for Obamacare was to cover the sick people who can’t get coverage because of preexisting conditions and people who can’t afford coverage?

@bkcunningham no no no. The idea was to bring people into the health care system. That means everybody not just sick people. It would be really stupid to have health insurance for only sick people, that’s what we do now and why costs keep rising.

I wonder why @Judi‘s insurance agent lied to her and why the reported information from the state of California is telling lying too, @Ron_C?

@bkcunningham, my insurance agent will still be able to sell me the program from the exchange. The California program will have a 26% decrease to a 2% increase. Our increases have been at least 10 percent per year for the last 10 years.

How does the exchange work, @Judi? Will the coverage be comparable to what you have now for your employee? The deductible and out-of-pocket and premiums will be the same? The list of providers who accept the insurance?

We they haven’t shown us the details yet. There will be several plans to choose from. We just renewed our current contract so we may have to wait until May to switch. I am curious about whether or not they will have PPO’s.