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Obamacare & Retail Shopping Center Employees and Workers

Post 5 of 11

Obamacare’s Effect on both employers and individuals.

On most of the retail shopping centers we manage, we employ dayporters, power washers, sweepers, janitoris and landscapers – laborers who on average make between $12-$20 an hour. As a service provider managing commercial properties, I’m told by our vendors that we are going to see at least two different price increases which equates to as much as an 8 percent cost increase as a result of Obamacare.

Any company that we employ who has more than 50 employees is required to offer to their employees health insurance.  And Obama says that the cost of this legislation which is in excess of 1.3 Trillion dollars, the government will simply borrow. According to Obama, once the war is over in Afganistan – which costs tax payers 1.3 Trillion, we will simply swap that spending over to Obamacare.  A veritable swap.

One particular vendor who has over 350 employees with an annual revenue of nearly 4 million in sales a year but with a profit margin of only 4% explains the cost this way.  “We are electing to pay the penalty ($150,000 a year) for not complying with Obamacare because it would cost us $2.5 million and put us out of business.” General Electric and many other companies will do the same. This will equate to a 4% increase in vendor services on our properties.  Who pays these costs? The tenants – the retailers and office building tenants.  Anyone who occupies a commercial property where there are these vendor services.  So, ultimately tax payers are getting hit in multiple ways.  Their paychecks get reduced with increased taxes, their corporate taxes increase, they’re rent and cam costs will go up as well.

Here is a summary in a nutshell.

Changes:

  1. For people who can’t afford health insurance, the Federal government will pay the states to add them to Medicaid. The income requirement is expanded to $29,000 for a family of four.
  2. Those who don’t qualify for the expanded Medicaid will receive tax credits if their income is below $88,000 for a family of four. States will be required to set up insurance exchanges to make it easier to shop for private health insurance coverage.
  3. Insurance companies cannot deny children coverage for pre-existing conditions. This benefit applies to everyone in 2014. Insurance companies can no longer drop anyone from coverage once they get sick. If a company denies someone coverage, that person can go to an external appeals process.
  4. Parents can put their children up to age 26 on their health insurance plans. As of 2012, more than three million previously uninsured young people were added.
  5. Obamacare does not apply to businesses with less than 50 employees. Larger businesses are required to offer health insurance, but receive tax credits to help employees pay premiums. In 2014, the tax credit increases to 50%.
  6. The Act will lower the budget deficit by $143 billion over the next 10 years by raising some taxes and shifting more cost burdens.

Cons:

  1. Increased coverage may actually raise health care costs. That’s because many people will receive preventative care and testing and tht additional testing, such as cancer screening and cholesterol tests, will lead to higher net medical spending.
  2. Those who don’t purchase insurance, and don’t qualify for Medicaid or subsidies, will be assessed a tax of $95 (or 1% of income, whichever is higher) in 2014. It increases to $325 (or 2% of income) in 2015, and $695 (or 2.5% of income) in 2016.
  3. About 4 million people, or 1.2% of the population, will wind up paying the tax rather than purchase health insurance. Estimates show this will cost $54 billion.
  4. Taxes will be raised on one million individuals with annual incomes above a threshold of $200,000 and four million couples filing jointly with incomes in excess of $250,000. They would pay a total of 2.35% (up from 1.45%) Medicare taxes on income above the threshold. In addition, they will pay an additional 3.8% Medicare taxes. This would apply to the lesser of income from dividends, capital gains, rent and royalties or income above the threshold.
  5. Pharmaceutical companies will pay an extra $84.8 billion in fees over the next ten years to pay for closing the “donut hole” in Medicare Part D. This could raise drug costs if they pass this onto consumers.
  6. In 2018, insurance companies will be assessed a 40% excise tax on “Cadillac” health plans. These are plans with annual premiums exceeding $10,200 for individuals or $27,500 for families. Many of these plans are for people in high-risk pools, such as older workers or union workers in high-risk jobs. This then will end up costing them more for insurance.
  7. In 2013, medical-device manufacturers and importers will pay a 2.3% excise tax. Indoor tanning services already pay a 10% excise tax. This could discourage those businesses from hiring new employees.
  8. Between 3-5 million people could lose their company-sponsored health care plans. Many businesses will find it more cost-effective to pay the penalty and let their employees purchase their own insurance plans on the exchanges. Other small businesses might find they can get a better plan through the state-run exchanges thereby taxing the government more – these costs then get passed on to the consumer.
  9. There are 30.1 million people who currently buy their own private health insurance. Many of them may need to get another plan if their insurance doesn’t meet the minimum standards — which haven’t yet been established.
  10. In 2014, families can only deduct medical expenses that exceed 10% of income. Today, they can deduct expenses that exceed 7.5% of income.

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