Small businesses are changing how they offer benefits to employees' health. The owners and employees are saves up to 60 percent giving money to employees to buy their own personal plans directly from insurance companies .
However, a decision of the Supreme Court is expected this week threatens to limit these economies.
With the approach of individual health insurance, instead of providing a group plan, a small company allows employees to purchase their own independent personal of the company and provides a monthly allowance to cover the cost.
Most small business owners and employees are eligible for an additional allocation from the IRS to help cover the costs of out-of-pocket health insurance. These additional allocations, called tax credits premium are at the center of King v Burwell Supreme Court case.
What King v Burwell ?
If you have not followed the case, here's a quick primer. The central question is whether the IRS is authorized to extend these additional benefits (tax credits on premiums) for individual health insurance coverage purchased by more than 30 federal-run exchanges Healthcare.gov
petitioners (king) argue that the affordable care Act text of President Obama (ACA) only allows tax credits on trade premiums managed by the state, that regulations providing for tax credits on managed federal grants, exceeded the authority granted Congress. In response, the federal government (Burwell) argues that the ACA allows premium tax credits to pay in all exchanges. Oral arguments were held in March this year and a decision is expected this week.
Who will win?
Most experts expect the decision to be in favor of the federal government (Burwell), cementing the occasion of the aforementioned savings for small business owners and employees . However, if the Supreme Court rules in favor of the king, small business owners and employees could lose access to billions of dollars in premium tax credits.
If the Supreme Court rules in favor of the petitioners, about 6.4 million Americans , including many owners and small business employees would lose their premium tax credits. Keep in mind, King v Burwell only a direct impact on Americans residing in over 30 States that have implemented managed federal exchanges. The reality, however, is that everyone will be affected directly or indirectly.
immediate impacts if King wins
A decision of the Supreme Court in favor of the petitioner King v Burwell trigger the immediate outcomes in states with more than 30 federal exchanges managed :.
1. Loss of premium tax credits
More than 6.4 million small business owners, employees and individuals lose billions of dollars in premium tax credits.
impact :. The average out-of-pocket cost of insurance for people affected would increase by over 300 percent
2. Clarify the individual mandate
Loss of premium tax credits will result in the individual health insurance to become "unaffordable" (as defined by the ACA and calculated as a percent of income) for tens of million. Americans
impact tens of millions of Americans would be exempt from insurance coverage obligation purchase of health because of too high prices. This will increase the number of uninsured and destabilize the insurance market.
3. Employer Mandate Destruction
Loss of premium tax credits will cause the employer mandate to become inapplicable in federal states with managed trade.
impact :. companies in these countries with 50 or more employees would no longer be subject to the $ 2,000 per employee penalty for not offering health insurance
Congressional Corrections
because of the potentially negative effects of a decision in favor of the applicants, many experts believe that there will be a bipartisan agreement to resolve the issue in Congress. A Congressional fix should focus on preserving a market for affordable individual health insurance and stable.
This is great news for small business owners and employees, and would preserve the personal approach to employee health benefits.
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