Team@AlexGPR.com +1 816-945-2477

Obamacare Misconceptions, Options Explored

1381938_323499751123513_1614383039_nThe Affordable Care Act, aka Obamacare, is as confusing as it is divisive. That’s why it’s great to get to know people like Greg Howard.

Howard is a federally certified Affordable Care Act broker with the expertise to help businesses and individuals understand the new health care law.

Below is an excerpt from his in-depth interview with KCActive.com. It explains a great many things and clears up numerous misconceptions about the new healthcare law.

You can read the entire interview by clicking the link at the bottom of this post.

What is the linchpin of the Affordable Care Act? The individual mandate?

Certainly the individual mandate is crucial to the underlying financial structure, but for individuals and business owners, the key element is the Federal subsidy plan.

How does that affect an individual? A business owner?

The Affordable Care Act is a tax law. Individuals and businesses should use it to their advantage.

When you say the ACA is tax law, what do you mean?

From a business perspective, if viewed simply as a tax law that affects both employees and employers, you can pretty quickly discern how to apply it to your employees and your company. This takes the politics out of it and focuses on the things we can control. 

Can you elaborate on how the ACA affects both employers and employees?

Individuals with an adjusted gross income less than 400% of the Federal poverty level (FPL) qualify for a subsidy. Since the FPL is a uniform number across the country, 400% of the FPL in the Midwest represents a substantially larger portion of the population than say in LA or New York. A family of four with and modified adjust gross income of $94,000 qualifies for a subsidy. Current estimates are that between 72% and 75% of individuals and families in the Midwest will qualify for a subsidy.  

This becomes a tax planning issue for many. I can hear the conversation now between a CPA and his client. “You know Bob, you’ve got an adjusted gross income of $95,000 this year. If you invest a thousand in an IRA, I can get you a $4000 tax refund from the IRS.” 

In my business, I have a client with $2 million in assets who is talking with his CPA now to change how he takes money in so that he will have $21,000 in MAGI (Modified Adjusted Gross Income). He can then insure his family of 3 for $35/mo.

Business owners should recognize that they cannot compete with the federal government in subsidizing their employees’ health insurance, nor should they try. A family of four that makes $50,000/year can get subsidized health insurance for $280/mo. There is no health plan in the country through which a family of four can get coverage for that amount and have it cost the employer nothing.

A local employer of 10 people currently pays all of the health insurance for his employees and their families to the tune of $120,000 per year through a group health plan. If he does not offer health insurance and allows his employees to go to an exchange, he can raise their salaries to cover their portion of the subsidized premiums. The net result for the employees is exactly the same. They have health insurance and their employer has covered the cost. For the employer, he just saved over $70,000 before taxes. Any time you can save $7000 per employee in overhead at no cost to the company or the employees, you should do it. What would an employer do with an additional $70,000? Employ more people? Invest in his business? 

Consider this if public education is important to you and your community and you want to help our schools: Eliminate health insurance as a benefit because in reality it no longer benefits our teachers and their families. Use some the money to give teachers a raise and let them go to the exchange to purchase insurance. The average cost for an employee in employer sponsored health plans across the country in 2012 was $467/mo according to the Kaiser Family Foundation. What would our schools do with an additional $5600/year for every full-time employee they have?

Sounds a little confusing. Is the ACA difficult to understand?

It can be, but our goal is to simplify the process and give individuals and businesses a clear path through the maze. As a tax law, it’s pretty straightforward. 

As an individual, do what you can to get your modified adjust gross income into the range of 100% to 400% of the FPL and take the subsidy. If you make too much money for that, either stay on the plan you are on now, or look at short-term major medical plans as a viable and affordable alternative.

As an employer, unless the majority of the employees all make more than 400% of the FPL, don’t offer group health insurance. It costs you money and penalizes your employees. For most employers it is in the employees’ best interest not to offer health insurance. Then the only thing they need to understand is what their penalty will be in 2015 and beyond. This approach avoids COBRA issues and eliminates the line item from the employer’s budget, leaving money to grow the business, hire new employees or give people a raise.

 Read More Here.

Disclosure: Greg Howard is a client of AGPR.

Please follow and like us:
LinkedIn
Share
Instagram
Twitter
Follow by Email
RSS
YouTube
Pinterest
Mastodon
error

Enjoy this blog? Please spread the word :)