Breaking Down Obamacare: Critical Issues For Large Employers - 47 ABC - Delmarva's Choice

Breaking Down Obamacare: Critical Issues For Large Employers

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Chris Carroll Chris Carroll
Chris Keen Chris Keen

WMDT 47 News - It appears large employers are struggling to adapt to the provisions of Obamacare, and frustration is building as reality sets in.

"One piece of legislation that has made changes already - employers cutting employee hours," licensed insurance consultant Chris Keen of Keen Insurance Associates said.

By 2015, employers with at least 50 full-time, 30-hour employees will be required to provide health insurance or pay a hefty $3,000 fine for each uninsured employee. Insurance experts worry it could create some friction between the employer and employee.  

"We've seen employers starting to cut down hours to 28, 25 hours such that they will not be subject to penalty for that employee," Keen said.

That's exactly what Katie Frantz says has happened to her.

"The job that I currently have is part-time. And they don't want to let me be full-time because they don't want to pay me benefits. And I don't even need the benefits because I have it through my husband. It's just very annoying," she said.

Some employers have found that from a financial standpoint, they would be better off just paying the penalty.

"In some cases, we have spoken to employers who have said we can do without health insurance and pay less on a penalty. Others have agreed to continue with the health insurance and make some minor changes to the plan design. So depending on the makeup of the group, the average wage of the group, whether or not they use a lot of season, full-time or part-time employees, the answer is whether or not to pay the penalty or keep providing health insurance changes," Keen said.

These tax penalties have nothing to do with revenue - something Licensed Insurance Consultant Chris Carroll of Atlantic Smith, Cropper & Deeley is concerned about.

"A company with 45 employees making $20 million a year has no tax penalty. An employer with 55 employees with a million dollar loss could be facing a $70,000 penalty. They already have a million dollar loss, where does that kind of money come from? You would think that revenue would be a driver, but it's the number of employees that you have. In particular, we've heard a lot from the fast food industry and retail locations that have a lot of labor, but very tight margins. They're struggling to figure out where this money comes from," he said.

But he's confident businesses will find a way to manage.

"If you've been a successful business for many years, you've had to adapt to other things before. I hope businesses are able to put pressure on the system to highlight and show some of the incongruencies that are built in the law, and I think that will lead to change."

Carroll also worries the delay in the employer provision could harm employees when it comes to the advanced federal tax credit. He says some folks could mistakenly get a tax credit they weren't supposed to then suffer the consequences later.

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