I will try and do this in one post, my apologies for the previous double posts.
Ox, good points.
There seems to be a tendency in the press to push everything to some limit and talk about the extremes as if they are the norm. It may be 'fact' but it is skewed fact of instances that are really outliers, and the authors make little substantive contribution to understanding the problem.
Hawaii has had an over 20 hour rule for health care for 20 years and despite what many might think, we have fast food joints here. I’m not sure what the mandated employer contribution is, but I believe it is fairly high. We have a good group of HMO’s as a result of the captive demand. Lower paid workers still scramble to find jobs with health care.
The new rules will not allow employers to avoid bringing in the lowest paid least employed individuals into the pool, but will provide some tax credit incentives to help with the cost. I’ve never heard employee’s complaining much about paying their share of medical coverage, the problem for part timers is the ability to Gain the right to pay for health care. From what I have read the new rule is employer payments of no less than 50 percent of the premium.
Given the rules about hours worked, 2080 hours as an FTE, full time equivalent (see below), it would seem to me that in the long run an employer will find cost savings in a more steady, longer working, salaried ‘white collar’ staff. Employees will be expected to work more than 2080 hours, but since they are salaried it won’t count. (Big Business has been doing this for decades. I don’t know anyone on a salary that puts in just 40 hours per week--if they expect to advance. When I was an assistant-manager at a restaurant while in college I worked harder after I got that 'raise' than when I was behind the grill, and I don’t think the ‘all you can eat’ was much compensation)
There will also be subtle moves to exclude the worker with dependents. The cost (including health care) of a part time working mom may be significantly higher than an 18 year old college guy if she has five dependents. (This will have to be dealt with at a later time. All workers will have to be treated equally with adjustments through tax incentives or credits.) (Sex and age discrimination is rampant. It's Ok to turn down the ugly old people. So sorting out the applicants a bit more will be easy)
We will also see a shake out of less efficiently run businesses. You may not find the burger dump you frequent on every other corner, and may have to travel a mile or two more. Jon’s cited article said the businesses were making on average 50-100K profits per year . Quite frankly that is hardly worth the risk, considering all the non employee liability issues. That means that each employee is generating an average 2K profit per year? The numbers don’t make sense, are mixed their manner of calculation, and utilize firms and situations that sit in the 'tails' of the curves.--in my opinion.
Jon’s originally cited article concentrates on the costs at the margin--a transition point. Large firms going over the 50+ FTE level. Marginal costs are substantial. These sudden marginal costs are compared to average costs at times, as if one is going from average unit to that marginal transition unit and it never changes. We have to realize that firms adapt as they grow, and this analysis presents it as if the firm went from nothing to full coverage of everyone. The legislation recognizes the problem ( to some extent) and allows calculations to exclude the first 30 FTE’s in many cost calculation situations. It also deals with smaller firm's problems, so few firms are going to suddenly be making the transition cited in the article. (50 employees is a pretty good sized firm!)
I don't know what to make of the Health Care Law. We can not leave a considerable portion of the population uncovered and keep paying their emergency costs through increases in our own insurance costs. Most lower paid employees just want coverage, and are willing to pay for much of their care cost (at least as I have seen it.) So we are not throwing the entire cost on employers.
I'm told my own costs will rise, but they are already rising about 20% per year (reduced benefits and increased premiums), so don't throw me in the brier patch. The option of paying a higher cost for a burger is, in my opinion, better than having no choice and seeing my premium rise while I have been fortunate enough to avoid using my benefits. Right now, as I see it, I'm subsidizing the guy who risking a lot of money to make 2K per worker in a business I don't frequent. Why am I supposed to be happy about that? He is an idiot, I'm a schmuck, and the guy flippin the burgers just spit on the patty because his wife is pregnant and he can not afford to take her to a good doctor, and he is pissed off. But, yes, it's the 'american' way. We are supposed to wring our hands, (the new american symbol of strength) and whine about how bad the other guy has made things.
As far as limiting my access to health care (via insurance benefits), well, I've seen a lot of older people incur a lot of health care costs that just don't make sense. It makes them miserable, they don't particularly want it, as they know they are dying, and the docs and insurance gang are spoofing the systems and covering their asses against Liability. Telling a 90 year old that massive chemo therapy and surgery on what is likely incurable cancer may just be the best thing for everyone. The person in the room least afraid of dying is often the patient. Is it rationing, a death panel, or is it just common sense? We are letting people who lack any idea of quality, and can only see quantity as good, decide our futures. (The Pope quit because he's sick, he is dying, and he just wants to be left alone. Yet a large number of people can not understand that people die slowly and with great discomfort. --its the same blindness.)
the 'hyper-whine' we seem to be engaged in as a nation is doing us no good.
Here is how they calculate the Full-time equivalent and small business credits.
Calculating Full-time Equivalents (FTE's) and small business credits:
Before you can determine if your business qualifies for the health care tax credit, you must determine if you have the required number of full time equivalent (FTE) employees). The number of FTE's you employ must be less than 25.
The number of an employer’s FTE's is determined by dividing:
The total hours for which you (the employer) pay wages to all employees during the year, up to 2080 per employee (40 hours per week for 52 weeks), by 2,080.
The result, if not a whole number, is then rounded to the next lowest whole number. So, 17.80 employees would be 17 FTE's.
Seasonal workers are disregarded in determining FTE's and average annual wages unless the seasonal worker works more than 120 days during the tax year.
The IRS provides this example:
For the 2010 tax year, an employer pays 5 employees wages for 2,080 hours each, 3 employees wages for 1,040 hours each, and 1 employee wages for 2,300 hours. The employer’s FTE's would be calculated as follows:
Total hours not exceeding 2,080 per employee is the sum of:
a. 10,400 hours for the 5 employees paid for 2,080 hours each (5 x 2,080)
b. 3,120 hours for the 3 employees paid for 1,040 hours each (3 x 1,040)
c. 2,080 hours for the 1 employee paid for 2,300 hours (lesser of 2,300 and 2,080)
These add up to 15,600 hours
FTE's: 7 (15,600 divided by 2,080 = 7.5, rounded to the next lowest whole number)
Applying FTE's to the Calculation for the Health Care Tax Credit
Step One: Determine the total number of FTE's If you have fewer than 25 FTE's total, you can proceed to Step Two.
Step Two: Calculate the average annual wages of employees (not counting owners or family members): Take the total annual wages paid to employees. Divide it by the number of employees from Step One. Total wages divided by number of employees = average wages.
Step Three: Make sure your business pays at least half the insurance premiums for employees at the single (employee-only) rate.
If you meet all three criteria, you may be eligible to take the Health Care Tax Credit. Use IRS Form 8941 (PDF) to calculate the tax credit. |
