Obamacare’s ‘Mini-Firewall’ May Force Employers To ‘Snoop Around Employees’ Household Income’

By Craig Bannister | November 13, 2012 | 5:48pm EST

Employers shouldn’t think they’re safe from Obamcare just because they already offer insurance, a 350,000-member small business group warns.

As National Federation of Independent Business (NFIB) Director, Federal Public Policy Amanda Austin explains:

“Under the employer mandate provision, there is something called the affordability standard or otherwise known as the ‘mini firewall.’ Employers that are offering coverage and think they are not affected by the employer mandate should think again.

“This firewall allows employees to jump from their employer plan [to the new exchanges] if they pay more than 9.5% of their total household income for their share of the premium. Typically employers do not have access to what employees’ total household income looks like and therein lays the madness.”

Obamacare creates uncertainty about carriers’ participation rate requirements (usually 75%), which could affect group coverage if too many employees drop out. Both employers and employees will each face the potential of penalties if they do not secure creditable coverage.

Thus, employers may resort to snooping on their employees to find out if this is a threat, NFIB’s Austin warns:

“So on top of an already anti-business law, employers will now be forced to either snoop around employees’ household income or go in blind and hope for the best. It’s challenges like these and many others that make this law so difficult for employers.”

If too many employees abandon their employer’s plan, more than half of employers are likely to stop providing health insurance coverage, NFIB explains in a review of Obamacare:

“Low-wage employees, particularly those experiencing a large premium cost-share, have a powerful incentive to bolt an employer’s health plan for the newly established and heavily subsidized exchanges. Should employees begin to leave for an exchange, 26 percent of currently offering small employers are very likely to explore dropping their health insurance plans and another 31 percent are somewhat likely to do so.

“A key factor in a small employer’s decision to drop a current health insurance plan will be the proportion of employees who leave their health plan for an exchange. Forty-three (43) percent report that a majority of employees would have to leave before they would drop their plan and 35 claim it would require all of them.”

Thus, employers are going to have to scrutinize their current use of staff, take a long, hard look at their expected workforce needs – and make some tough choices, NFIB’s Austin concludes:

“Employers will have difficult decisions to make regarding current and future employees as it pertains to PPACA. With the new healthcare law requiring businesses with 50 or more full-time workers to offer coverage or be fined, employers must plan and rethink their workforce now more than ever.

“They will need to know things like are they close to 50 full time workers, do they employ multiple part-timers, and what are the precise hours worked by the employees.”

In short, each business out there must assess what is the best for them. New taxes and mandates will complicate these decisions and cost businesses money in the long run.”

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