The Obama administration issued long expected guidelines about the implementation of the health care law on Monday containing a huge loophole that could leave millions of Americans still uninsured.
As the IRS interprets the law, employers with more than 50 workers are required to offer health care insurance to the dependents (though not the spouses) of their full time employees, but there is no requirement to make that coverage affordable.
Therefore you can offer a ‘family plan’ for a worker making $10 an hour (about $20,000 a year) that costs $15,000 and if the worker ‘elects’ not to buy the coverage, you as an employer have done your job and are off the hook.
The new law, however, requires companies to offer ‘affordable’ health care plans to employees, with ‘affordable’ defined under the proposed regulations at 9.5 percent of total wages. The New York Times notes this creates a strong incentive for employers to put their health care dollars towards subsidizing individual plans while encouraging them to cut any subsidies they now offer for family plans.
It is unclear whether the spouse and children of an employee will be able to obtain federal subsidies to help them buy coverage –separate from the employee- through insurance exchanges being established in every state. The administration explicitly reserved judgment on that question, which could affect millions of people in families with low and moderate incomes.
The Obama administration said Monday that employers must offer health insurance to employees and their children, but will not be subject to any penalties if family coverage is unaffordable to workers.