Friday, June 14, 2013

Obamacare unaffordable for low-wage workers


The Affordable Care Act or Obamacare health care law may be unaffordable for many low-wage workers, which includes big chain restaurants, hotels, retail stores, and other businesses.

Yes, the law requires medium-sized and large employers to offer affordable coverage or they will be penalized. However, some policy experts say businesses can get off the hook while the employees could still face a federal requirement to get health insurance.

Still many are expected to remain uninsured and would rather risk being penalized because the law states that  workers with an offer of "affordable" workplace coverage are not entitled to new tax credits for private insurance, which could be a better deal for those on the lower income middle class.

Ron Pollack, president of Families USA (liberal advocacy group) said: "Some people may not gain the benefit of affordable employer coverage. It is an imperfection in the new law. The new law is a big step in the right direction, but it is not perfect, and it will require future improvements."

Andy Stern of the Service Employees International Union said: "The provision is an avoidance opportunity for big businesses."

The law requires businesses with 50 or more full-time workers to offer coverage that meets certain basic standards and costs no more than 9.5 percent of an employee's income. Failure to do so means fines for the employer.

For an employee making $21,000 a year, 9.5 percent of their income could mean premiums as high as $1,995 and the insurance would still be considered affordable.

Even a premium of $1,000 close to the current average for employee-only coverage could be unaffordable for someone stretching earnings in the low $20,000's.

With such a small income, "there is just not any left over for health insurance," said Shannon Demaree, head of actuarial services for the Lockton Benefit Group. "What the government is requiring employers to do isn't really something their low-paid employees want."

Based in Kansas City, Mo., Lockton is an insurance broker and benefits consultant that caters to many medium-sized businesses affected by the health care law. Actuaries like Demaree specialize in cost estimates.
Another thing to keep in mind: premiums wouldn't be the only expense for employees. For a basic plan, they could also face an annual deductible amounting to $3,000 or so, before insurance starts paying.

"If you make $20,000, are you really going to buy that?" asked Tracy Watts, health care reform leader at Mercer, a major benefits consulting firm.

And low-wage workers making more than about $15,900 won't be eligible for the law's Medicaid expansion, shutting down another possibility for getting covered.

It's not exactly the picture the administration has painted. The president portrays his health care law as economic relief for struggling workers.

"Let's make sure that everybody who is out there working hard and doing the right thing, that they're not going to go bankrupt because they get sick, that they're going to have health care they can count on," Obama said in a Chicago appearance last summer during the presidential campaign. "And we got that done."

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