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USA Today Ignores Obamacare Created Employment Discrimination

“Small-business owners unclear on health care impact” reads the March 23rd USA Today headline over a story by Bruce Horovitz and Laura Petrecca. Horovitz and Petrecca do a decent job of talking to small business owners for and against President Barack Obama’s health care law and the even include “A look at some of the provisions and their effects” including:

By 2014, employers who have more than 50 employees must offer health insurance benefits or pay penalties. Companies with 25 or fewer employees who meet certain wage requirements will also be able to get credits toward health insurance purchases.

This is true, but it doesn’t adequately examine just how much of their employees lives employers will have to learn about in order to comply with the law’s health insurance mandates. Heritage Foundation fellow Robert Book explains:

The Senate health care bill includes a well-known “employer mandate” provision that would require employers to offer “qualified” health plan and pay 60% of the premium, or pay an annual tax penalty of $750 per full-time employee.

What is less well-known is that the provision would also tax companies even if they do offer insurance – but only if they hire people from low- and moderate-income families who qualify for, and elect to accept, premium subsidies. And the tax penalty for hiring those employees – arguably the people who need jobs the most – would be a whopping $3000 per year.

Who would qualify for such a subsidy?
There are two criteria. First, family income – not how much this employee is paid by this company, but total family income – would have to below four times the federal poverty level (FPL). The FPL depends on family size; for 2009 four times the FPL would be $43,320 for a single adult with no children and $88,200 for a family of four (regardless of whether it’s a single parent with three children or two parents and two children).

Second, the premium share to be paid by the employee would have to be more than 9.8% of family income. Note that in both cases, whether a company has to pay the $3,000 tax depends not on how much that company pays its employee, but on the total income of all the employee’s family members from all sources. (Normally employers don’t know the income of their employees’ family members, but the Senate bill calls for the IRS to tell employers which employees fall into this category on a monthly basis.)

The combination of this tax penalty and the rules for determining who qualifies for premium subsidies would encourage companies to engage in some new and repulsive forms of employment discrimination.