Under the current version of HR 3200 Health Care Reform Legislation, certain employers are required to provide health insurance or suffer a penalty. The latest version exempts employers with total payrolls up to $500,000 and then phases in a penalty as a percentage of payroll to a maximum of 8% of $750,000. For example, if the payroll is $500,000 the penalty is 2% of payroll and gradually increases based on total payroll to 8%.
If you were a small employer trying to cope with all this what would you do? Would you try to keep your payroll under $500,000? If it were already $500,000, would you try to keep it from rising? If you were near $750,000, would you try to get into the next lowest category? How would you accomplish this, perhaps you would avoid hiring a new worker, or even cut a job or two? Maybe you are less draconian and only avoid wage increases or even cut pay a little to stay under the cap.
The point is that for every action there is a reaction. It even gets worse, what if the penalty is a fixed dollar amount that is so low it is better to pay the penalty than to offer coverage that costs you thousands of dollars? What would you do?
You have your own views on an employer mandate to expand coverage in the US, but if we are going that route, let us make sure it makes sense and does not create more problems than it solves.
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