<p>Note that busdriver’s company pays the health costs of the employees, PLUS they pay Blue Shield to administer the program, PLUS they pay their own employees to deal with the self-insurance (which may involve more work than just dealing with an insurance company, I don’t know). So the number reported on busdriver’s W2 is not directly comparable to what a non-self-insuring company pays.</p>
<p>You have to have a very big company for self-insurance to be safe. With a smaller company, three premature babies and a liver transplant could sink the whole company. [on edit] Read bclintonk’s post about, which explains the whole situation about small companies and self-insurance better than I did.</p>
<p>“With a smaller company, three premature babies and a liver transplant could sink the whole company.”</p>
<p>I worked for my father’s company (250+ fast food rest. chain) in the 80’s and we insured about 2000 people (and their families) in management and warehouse teamsters and truck drivers. Whenever we had even a few preemies our costs would sky rocket and there was always a few. So every year when we had to renew we would switch insurance companies - who would give discount to get the company’s business. We also had to agree to other changes in benefits, put in wellness programs (or improve them,) offer smoking cessation programs, etc., etc., etc, and increase employee’s share of premium. </p>
<p>I think in this situation, if you needed the insurance, the best approach would either be to (a) take the subsidy you qualify for based on most recent year’s income, but bank the subsidy money - so you aren’t caught short if your income is higher and you have to pay it back, or (b) forego the subsidy, but buy on the exchange so you are eligible for a possible cash rebate. The choice between (a) or (b) is probably just one of cash flow, as there really is no benefit to the banking strategy at current interest rates. </p>
<p>However, the other advantage that self-employed people is having a measure of control over income and expenses. If you are borderline subsidy eligible, where a few thousand +/- is going to make the difference, then I think that most self-employed people could find a way to tweak their business income & expenses toward the end of the year. For example, pay your January office rent or other upcoming bills a few days early in December, or hire extra part-time help in December. It just becomes very important to keep current on accounting, so you have a good picture of where your year’s income is in December, to decide whether it’s worthwhile to to try to accelerate expenses and defer income. (My billing practices are so haphazard anyone that no one would notice if I decided to wait until after the first of the year to send out a bill).</p>
<p>I’ve noticed that on cc, the phrase “the middle class” is generally used to refer to the “upper class”. (We see this in the financial aid threads as well). Basically, the income distribution in this country will leave the lower economic third eligible for Medicaid (at least in the Medicaid expansion states); the middle third subsidy eligible; and the top third will not be eligible for subsidies. I realize that could be a significant hardship for the people who are on the lower end of the upper third – there is a fairly steep drop off, especially for older people who are subject to higher insurance rates. However, that hardship is nothing compared to the people in the lower third in the non-Medicaid expansion states, who have simply been left out in the cold by their state governments. (As a practical matter they can qualify for subsidies by simply lying about their anticipated 2014 income, but no one is going to tell them that, so I am thinking that only a small percentage will be savvy enough to figure that out.)</p>
<p>Most people in the upper third are already enjoying subsidies for insurance. They are not taxed on their employers’ contributions to their health care. They are more likely to be homeowners who can itemize deductions than the lower two-thirds, and as noted they can deduct all medical expenses over 10% of their AGI, including excess health insurance premiums. They also are more likely to have enough discretionary income to fund and HSA, which essentially lets them deduct their pretty much their full insurance deductible whether they use it or not. So they GET subsidies, they just get their subsidies in a different way.</p>
<p>Nobody is taxed on employers insurance contributions (yet). It is a benefit provided to many employees, at all income levels. It is not a subsidy designed for the upper and upper middle class, it benefits all employes who work for companies that provide health benefits (the vast majority of workers).</p>
<p>It’s a bigger benefit to people with higher earnings because they have higher marginal tax rates – also the higher earners are more likely to have employer provided health insurance, or better quality health insurance with a higher level of subsidies from their employers. The higher you go on the pay scale, the more likely the job is accompanied by generous benefits.</p>
<p>Along with making more money, we are asked to pay more for things like college tuition. </p>
<p>When we made a third of what we do now and had a few kids, we paid a lot less in taxes. Our rent was cheap. We survived. It was not easy. </p>
<p>Bought a house, and yes, we get some deductions for that. We also get to pay for things like the roof and the plumber and all that goes with it. Property taxes, school bond taxes, etc. </p>
<p>The last few years, we could only take the same standard deduction that many other families do who make less than us. I still wrote a check to both the state and federal givernment for more taxes. Money I didn’t have in the bank, I might add. Lots of people lost their nest eggs, their homes and their safety nets. We were lucky we saved our home, others not so much. </p>
<p>I wouldn’t say things are all that much easier, now. If we had to pay 10 or 20% of our after tax income more than we do for coverage, you better believe we would have to figure out every angle, every tax break we could. The money is just not there. </p>
<p>Not complaining, I realize so many people have it worse, financially and otherwise. But if I were to try to replicate the same health insurance I have now if my husband lost his job, well, it won’t happen. We will appreciate it for as long as we can, and hope we have the priviledge of another group policy in the future.</p>
<p>My sister and my brother-in law are going to struggle to pay their health care bills. My sister is disabled. </p>
<p>They are thinking of funding a 401k because that would cut their income and make them eligible for subsidies.</p>
<p>If somebody loses a job, At least they may be eligible for subsidized healthcare. The healthcare may not be as good as busdriver11’s or my friend mentioned earlier…but it is something.</p>
<p>I hope that your sister and BIL get decent insurance, dstark. But it seems odd that they would not count contributions to a 401K as income, when they are looking at giving subsidies.</p>
<p>back in the dark ages, when I was working with our actuaries, the rule of thumb for a company to consider self-insuring – with stop-loss insurance for the large claims – was 300+ ee’s. Our broker says that she has clients that were self-insuring at 100+ ee’s. But those were in what is now non-compliant plans, with more limited benefits than in ACA compliant plans.</p>
<p>That seems like a smart tax move, but if they are funding the 401K with money they can’t spare and have to cash it in early, it could really cost them more than the subsidy.</p>
<p>Well, I’m not an expert in accounting or in tax law, but I would think the cost of stop-loss insurance would need to be included in the cost of insurance reported on the W-2.</p>
<p>Post # 3307 is one of the most political things I’ve ever read? It’s basically a call for the redistribution of wealth under the guise of a complex and misleading health care law. This thread is very weird.</p>