Saturday, November 24, 2012

ObamaCare will keep unemployment high by forcing small companies to cut their workforce to fewer than 50 people

Under ObamaCare, employers with 50 or more full-time workers must provide health insurance for all their workers, paying at least 65% of the cost of a family policy or 85% of the cost of an individual plan. Moreover, the insurance must meet the federal government’s requirements in terms of what benefits are included, meaning that many businesses that offer insurance to their workers today will have to change to new, more expensive plans. ObamaCare’s rules make expansion expensive, particularly for the 500,000 US businesses that have fewer than 100 employees. Suppose that a firm with 49 employees does not provide health benefits. Hiring one more worker will trigger the mandate. The company would now have to provide insurance coverage to all 50 workers or pay a tax penalty. In New York, the average employer contribution for employer-provided insurance plans, runs from $4,567 for an individual to $12,748 for a family. Many companies will likely choose to pay the penalty instead, which is still expensive — $2,000 per worker multiplied by the entire workforce, after subtracting the statutory exemption for the first 30 workers. For a 50-person company, then, the tax would be $40,000, or $2,000 times 20. That might not seem like a lot, but for many small businesses that could be the difference between survival and failure.

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