Posted on 09/28/2012 8:24:43 AM PDT by Lorianne
Two big employers are planning a radical change in the way they provide health benefits to their workers, giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace.
Sears Holdings Corp. and Darden Restaurants Inc. say the change isn't designed to make workers pay a higher share of health-coverage costs. Instead they say it is supposed to put more control over health benefits in the hands of employees.
The approach will be closely watched by firms around the U.S. If it eventually takes hold widely, it might parallel the transition from company-provided pensions to 401(k) retirement-savings plans controlled by workers and funded partly by employer contributions. For employees, the concern will be that they could end up more directly exposed to the upward march of health costs.
"It's a fundamental change…the employer is saying, 'Here's a pot of money, go shop,' " said Paul Fronstin, director of health research at the Employee Benefit Research Institute, a nonprofit. The worry for employees is that "the money may not be sufficient and it may not keep up with premium inflation."
(Excerpt) Read more at online.wsj.com ...
This is the natural path for most corporations and I see it likely to gain momentum. It is EXACTLY like the move toward 401(k) style pension plans. It limits corporate liability and stabilizes their cost.
A lot of people won’t like it - unintended consequences of Obamacare. Only problem is that the trend won’t be visible in time to affect the election outcome.
On the plus side, it brings competitive pressures to bear in the market - exactly what we want to control costs and improve options.
I think there is a provision in Obamacare somewhere that they will assign someone to come over and hold your hand and make you a cup of hot chocolate while you are picking your insurance plan. :)
Yep, that’s what I mean. Government will find a way to prevent competition ... it’s what they do.
I think it should be taxable.
It is compensation (income).
No matter what you have left after taxes, you shop for the best deals on everything ... so why not insurance and medical care too?
So the employees think Barry, Pelosi and Harry are liars?
Bite down through that yummy sugar coated shell and you are still chewing of a fecal fruit cake.
they have been reading what I have been saying for five years
see my post # 29 in the following recent FreeRep thread:
http://www.freerepublic.com/focus/f-news/2936656/posts
The insurance companies are declining coverage on many individual cases.
No matter what you have left after taxes, you shop for the best deals on everything ... so why not insurance and medical care too?
Lets say that I currently make $50K/year AND that I have a FREE medical benefit from my employer that costs $4K/year.
NOW, the employer is going to give me $4K so that my wages EFFECTIVELY increase to $54K/year.
The healthcare still costs $4K/year, BUT it is now TAXABLE INCOME to me.
SO, 30% is taken for all combined taxes, leaving me with $2.8K for healthcare that STILL costs $4K.
I NOW have to make up the difference [$1.2K] - EFFECTIVELY LOWERING my $50K wages to $48.8K.
TELL ME - who's getting SCREWED, ME or the COMPANY ???
It is me since I just got EFFECTIVELY hit with a $1.2K "TAX" in order to pay for the healthcare ...
It’s a shame the Democrats passed Obamacare. Now a lot of employees are going to get a rude awakening and find out what their employer has Really been paying for years. The employee will get to pay for their healthcare, and the companies, via the “Roberts Tax” will get to pay for the healthcare of the “free cellphone crowd”.
Yes, I know it’s a hit but I just think that the health care exemption from taxes was a ruse and complicated things and tied people to their jobs that they might otherwise not want to be tied to.
I think if we simplify taxes and tax all income that we’d all be better off in end. Lowering taxes wouldn’t hurt either.
Honesly, that insurance was income. Great perk but we were just hoaxing the numbers saying it wasn’t income. Why not just raise the non-taxable limit on income ... same difference.
Exactly.
This may have a silver lining.
Plus it relieves employers from all that paperwork associated with adminstering health insurance plans. What a nightmare!
Interesting concept, you should repost that here.
I hadn’t heard this Rand Paul proposal before. Thanks
I don’t know exactly what Rand Paul’s proposal is/was.
Most of what I posted comes from my own thinking over the years. I all know of what Rand Paul said was the individuals should be incentivised to buy their own policies and that he thought they could cost about $3,000 a year.
I thought, by posting the link to my comments in the “Bill Frist” thread, that they were, by that means, available to those reading this thread.
Should I do more?
I think if we simplify taxes and tax all income that we’d all be better off in end. Lowering taxes wouldn’t hurt either.
Honesly, that insurance was income. Great perk but we were just hoaxing the numbers saying it wasn’t income. Why not just raise the non-taxable limit on income ... same difference.
Its noble of you to talk theory, "would be nice to's", and "shoulds" ...
BUT, I am talking REALITY - what the current situation is !!!
In my scenario, on a $50K salary with $4K given to me for healthcare - I EFFECTIVELY am having my salary REDUCED by 2.4% [$1.2K] in order to pay for something that PREVIOUSLY had been a benefit to me.
Does the company take a hit - NO !!! It gets to write the $4K off on the balance sheet as "salary".
*****
NOTE:
It would be one thing if the company "grossed up" the $4K to pay for it - but it won't.
"Grossing up" means that the company would give me $5.2K [$4K + $1.2K] so that the tax was paid. BUT, that $1.2K is ALSO taxable, so they "gross up" the $1.2K by 30% [$360]. The $360 is also taxable, so it it gets "grossed up", so an additional $108 is added ... and so on until the "gross up is less than $1 [I'll pay that].
The total "gross up" would result in a total of $5700.40 that would be paid by the company [$4K + $1700.40 for tax] to me.
This is what my comapny did when they paid my re-location fees.
*****
BUT, IT AIN'T GONNA DO THAT !!!
Does the government give me a tax credit - NO !!!
I GET SCREWED, the company is off the hook, AND the government gets EXTRA taxes [from me] - since the company's previous benefit to me was NOT previously taxable to them.
You say it is "taxable" - tell that to my kids when I tell them they can't go to Hershey Park, or a ball game, or other things BECAUSE I NOW am being "TAXED" for our healthcare !!!
Sorry. I just think if we’re going to tax income, tax all income. I’m tired of all the little games.
Also, it costs your employer a bundle to do the bookeeping on the insurance. That would save him/her money.
It wasn’t a good idea to begin with.
If everyone had to pay their own insurance and health care costs, prices would come down.
In my scenario, I was being compensated to the tune of $54K per year and being taxed on $50K.
Now, I am being taxed at the full $54K - with NO adverse penalty to my employer.
I AM OUT OF POCKET AN ADDITIONAL $1200 THROUGH NO FAULT OF MY OWN, THE COMPANY ACTUALLY ADDS MONEY TO ITS BOTTOM LINE, AND THE GOVERNMENT GETS FAT SUCKING EXTRA TAX OUT OF ME ...
Tell me - where is the Fairness in that?
What ever happened to, "If you make less than $250K, you won't see your taxes go up one penny ..."
OF COURSE IT DIDN'T - IT DIDN'T GO UP ONE PENNY, IT WENT UP 120,000 PENNIES !!!
And that is JUST one tax - more to come !!!
I’m not defending Obamacare.
I’m saying that the employer paid healthcare idea was never a good one and I’d like to see it phased out.
Income is income.
Once the government got involved in forcing employers to buy insurance for their emploeyees the whole situation go even more convoluted.
Like I said, I’d rather see the starting point for having to pay taxes go up than to employer provided health insurance benefits being untaxed. That is unfair to people whose employers don’t pay for health care. (Everything is unfair to someone I guess).
Maybe up the untaxed income threshhold to $18,000 per individual instead of around $9,000 now. That would mean you’d get an extra $9,000 of untaxed income over what you get now.
I’m not defending Obamacare.
I’m saying that the employer paid healthcare idea was never a good one and I’d like to see it phased out.
Income is income.
Once the government got involved in forcing employers to buy insurance for their emploeyees the whole situation go even more convoluted.
Like I said, I’d rather see the starting point for having to pay taxes go up than to employer provided health insurance benefits being untaxed. That is unfair to people whose employers don’t pay for health care. (Everything is unfair to someone I guess).
Maybe up the untaxed income threshhold to $18,000 per individual instead of around $9,000 now. That would mean you’d get an extra $9,000 of untaxed income over what you get now.
Well business once said our employees are our most important asset. Now it’s just shows that employees are now an expense rather than an asset and they can be written off quickly.
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