Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: obamacare | Employer | Mandate | health

CNNMoney: Circumventing Obamacare’s Employer Mandate May Be Hard

By    |   Sunday, 15 July 2012 05:36 PM EDT

While small businesses will be exempt from offering healthcare coverage to employees in 2014 because of Obamacare, defining a small business may be trickier than thought, CNNMoney reports.

Beginning in 2014, businesses with more than 50 full-time employees will be required to offer healthcare coverage to their employees or pay a penalty of $2,000 per worker above 30 employees.

Some businesses are aiming to get below 50 employees, the number that defines a small business in the healthcare law, by sidestepping the rule.

However, these actions will not work, according to CNNMoney.

Even by breaking a business into two or more separate businesses, the government would still consider the companies as one because the employer mandate penalty relies on “controlled group” provisions. These provisions focus on who controls the company, not what the companies do.

Christopher Condeluci, a Washington D.C.-based attorney who helped draft the rule for the Senate Finance Committee, said the provision is meant to prevent averting the law.

“These rules are intended to snuff out this type of abuse,” Condeluci said. “You cannot get around the employer mandate.”

Starting a second company that was never part of the first company will not work either, as the rule looks only at who owns part or all of the company, according to CNNMoney.

That means that business owners who have a total of 50 employees or more at completely different companies would have to provide coverage at both even if each separate company falls below the 50 employee threshold.

Married couples may also find themselves impacted by the provision, since tax law generally assumes an individual owns interest in their spouse’s business, Condeluci said.

Therefore, married couples that own small businesses should take steps to confirm that their staff won’t be combined by the Internal Revenue Service, which will enforce the mandate.

“It’s difficult to navigate the tax rules, and one misstep could pull them into the employer mandate,” Condeluci said.

One way that could work to avoid the mandate is to cut staff and switch full-time employees to part-time, which is defined as fewer than 30 hours per week, CNNMoney noted.

Still, some will opt to pay the penalty, as the fines will pale in comparison to increasing healthcare costs.

However, the proportion of businesses that will pay the fines instead of offering coverage appears to be small.

A survey conducted by management consulting firm Oliver Wyman Group showed that only 8 percent of the 1,329 employers polled planned to discontinue coverage, while 42 percent planned to maintain their current coverage. However, two-thirds of the respondents said healthcare costs were unsustainable at the current growth rates.

© 2023 Newsmax Finance. All rights reserved.

Sunday, 15 July 2012 05:36 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved