Saturday, December 20, 2014

Employers, HSAs and the ACA | xpostfactoid

ACA Subsidy By Income Family Of Four Chart
Lawyers are employers. Paying the employee's health insurance has been tax advantaged - it is untaxed for the employee and deductible for the employer. I used to show my employees their total compensation package.  Base salary for support staff was about $40,000(10-15 years ago). So deductibility was helpful. The ACA subsidies help a lot at that level. (See Financial Samurai HERE) But if you do what we did - "reward" with higher pay those who had coverage through a spouse it gets complicated. Andrew Sprung explains.  - gwc
Employers, HSAs and the ACA | xpostfactoid
by Andrew Sprung
Jay Hancock at Kaiser Health News reports that significant numbers of small businesses may stop offering health insurance to their employees, sending them instead to the ACA exchanges. This could be a good thing for employees who earn little enough to qualify for strong ACA subsidies -- win-win for employer and employee at the federal government's expense.

According to the Kaiser Family Foundation, small employers in 2014 paid an average of nearly $5,000 for solo coverage and a bit more $10,000 for a family premium. What if an employer wants to compensate employees for dropping a benefit that constitutes such a large share of their compensation?  There's a problem with straight salary increases: they reduce employees' ACA subsidies and so give a portion of the extra income back. At healthinsurance.orgI examine three scenarios in which a pay hike worth about 70% of a typical employer premium contribution triggers subsidy reductions ranging roughly from about 25-- 80%.

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