One of the things my H and I really appreciated about his working for decades with the federal govt was that it gave us excellent insurance coverage, including the ability to switch plans every open season if we chose to do so. It and still does provide us with great peace of mind. Since our S followed in H’s footsteps and is working for the fed govt, he also has excellent insurance options, but many, many others are not nearly as fortunate and struggle with getting adequate coverage, especially if they want to be self-employed or start a small business. Those who had thought they might like to retire early will also have to struggle with this as Medicare generally does not become effective until folks reach 65.
Or, more like, they do not want to be at a competitive disadvantage if they do not offer medical insurance, or offer a low quality one.
i stand by what I said.
If employers wanted to not offer insurance because it would be more profitable for them, they would have been at the doors of Congress with buckets of money advocating for, “that which shall remain nameless.” ages ago.
Well, as older workers, everyone should be concerned. 1) You cost your employer a lot more $$ than a younger employee and 2) if you lose your job, your age will make it harder to find a new one and will make finding insurance on your own exorbitant.
@emilybee:
They don’t do it because they can deduct it (though that was one of the original inducements that got companies offering it), since a deduction (unlike a credit) doesn’t cover the full cost. Even assuming that a third of the cost would be gotten back because of the deduction from their taxes, my current plan cost my employer around 18k a year, so even with a third off it would be 12k, and that is not a small amount. The reason is that despite grumbling and complaining, companies see it as part of the benefits package to attract employees, along with things like 401k’s, vacations and such. There also is a darker side to it, one that used to be much darker thanks to the ability to exclude prior conditions, and that is insurance as a deterrent from leaving. For example, let’s say a startup came after me with an attractive offer, but their health care plan either was nonexistent or skimpy, with a family that would be a big deterrent to leaving (I worked for a startup that had decent health insurance), if I wanted to start my own business the fact that my health insurance was tied to my employer is huge, and companies know that. Among other things, given how expensive health care and insurance is, they can skimp on other things like pay raises and the like, and in effect say “do you want to risk the plan at the next place being crappy”, and that does work. I personally think employers talk out of both sides of their mouth when it comes to insurance, on the one hand they complain and moan about how much it costs them, but on the other they know it is a kind of hedge against people leaving and also in getting people who need insurance to come on board for the insurance and willing to take less in other things.
There is a lot of that all over, many of those who totally freak out at the thought of a non employer based health insurance, especially single payer, are often the people who most push the idea that small businesses are the lifeblood of business, they create most jobs, etc (and that is not ficition, it is really true), and having employer based insurance most hurts those small businesses, if they didn’t have to worry about that they could attract the best and brightest without insurance being a factor…which is why bigger businesses don’t want it, since they don’t want the best and brightest going to the small firms.
There is also the phenomenon that if something is working sort-of-ok for someone, s/he may be reluctant to give it up in favor of something new and significantly different. This may apply to both larger employers and their employees with respect to employer provided medical insurance. Eliminating that and going to either an individual marketplace for all or single payer system leaves enough uncertainty that many may prefer the known thing that works sort-of-ok even if it has known problems.
But retaining the prominence of employer provided medical insurance distorts the market in ways that make any decent reform difficult.
Of course they do it for other reason besides the tax break but I guarantee that if that was done away with employers would stop offering insurance. They wouid use increased salaries (and other tax advantageous benefits) to recruit and retain employees. It wouid not save them any money - it wouid cost them money because they wouid lose the tax break they get. Salaries are not tax deductible.
I’m quite sure they very much like the tax break they get.
Wouldn’t it be nice if all of the citizens of this country had the same rich health care benefits you have @Himom. You do understand…there are many many folks who do NOT have this available to them. You are fortunate to have this fabulous coverage, but it’s a shame others are not able to have even a fraction of the coverage you have…at even double the cost.
As a country, we should be able to do better than this.
Yes, I wish everyone had the options that are available to all federal employees. It is a terrible shame that others do not get this benefit. It was definitely something that got us to encourage our S to consider working for the federal government.
In HI, by state law, people who work 3 weeks or longer for at least 20 hours/week are required to be offered insurance by their employer. The way employers get around this is calling many of their staff “independent contractors” as well as having them NEVER work 20 hours or more or never more than 2 weeks consecutively. This means there are quite a few people stringing together multiple part-time jobs so they can make enough to pay bills. It also means that larger employers who want reliable employees do offer health insurance as a benefit to their part-time workers who work 20+ hours/week. Of course, the quality and price for the insurance varies widely.
@thumper1, you will never get any argument from me that we as a state and nation should be doing much better than this in terms of providing better baseline healthcare for everyone.
Sorry, you should NOT have to work for the federal government to get a small portion of their health care benefits.
Thismis one of the missing links in this proposed new health care act. If we continue to tie health insurance coverage to employers, there are many who will be disenfranchised in this process.
That includes federal and state employees, as well as private sector.
What does,this do for the entreprener who is starting a new business. Or, the self employed artist or musician? Or the grad school student where health care is not offered by the college at any cost? Or the folks who are laid off and run out of Cobra coverage? Or,the 63 year old who is laid off from their job and can’t find another?
Maybe we are all wrong and TrumpCare will be great. Maybe the insurers will offer great plans at much cheaper prices and ones that every doctor/hospital will accept. It’s too early, I suppose, to really know how it will work out.
“Salaries are not tax deductible.”
They certainly are, the wages a company pays are a business expense, plus they also get to bill for the hours employees work on new product development as a cost as well (I know, I am a white collar employee, but I fill out a time sheet showing my hours on new projects, because it is deductible). Salaries, bonuses and any kind of stock options/stock grants are deductible by the company.
It appears that we are going in circles. Everyone on this thread has agreed that tying healthcare as an employment benefit has problems. Also, pretty much everyone has agreed that not having healthcare unless it is provided as an employee benefit will make it much tougher and more expensive to be a small business person or self-employed or retire before Medicare-eligible.
@emilybee Those are promises which have been made repeatedly by all proponents of repeal and replace, so we should remember them well. Those are the standards by which TrumpCare should be judged.
I don’t see how it’s possible to take steps to contract the market, discourage healthy people from enrolling, and cut assistance – and yet end up providing coverage that’s cheaper, better, and more widespread. I have a feeling that the CBO won’t think it’s possible either. I wait with interest.
@musicprnt, I did not know that ( but I should have now that you pointed it out.) I though only benefits were deductible. Shame on me. Are corps allowed to deduct 100% of the cost?
Anyway, I still stand by my argument that they offer it because of the tax break they get and if that was taken away they’d drop it in a heart beat - but wouid have to increase salaries and other bennies to compensate in recruitment and retention.
Perhaps big business does not mind having medical insurance tied to employment. Dealing with medical insurance as a self-employed individual, or as a small business providing it to employees, is probably a bigger burden relative to the size of the business compared to a big business, so it gives big business another competitive advantage over small business.
Of course, big business has the biggest political lobbying power.
The difference in tax treatment is on the employee side. If an employee receives cash pay, s/he has to pay payroll and income tax on it. If s/he receives medical insurance as a benefit, s/he does not have to pay payroll and income tax on the value of such.
Therefore, even if an employee has access to similar individual medical insurance plans at similar price as those purchased by the employer, giving the employee extra pay in lieu of the cost of medical insurance means that the employee will have less money to buy medical insurance with after paying taxes on the extra pay.
^But that could be changed, too, if legislators want it to be changed. People can deduct mortgage interest and other expenses including medical expenses above a threshold. Any overhaul could adjust that.
Yes, I know that - hence the tax break ($2k-4K per person) instead of subsidy TrumpCare participants will receive for plans bought both on and off the exchanges up to certain income (forgot now - maybe $100k?)
And yes, to recruit and retain employees companies would have to increase salaries to compensate for lack of health insurance benefit.
If NO employers offered health insurance…I seriously doubt that salaries would increase to make up the difference.
@emilybee the current proposal has tax credits for individuals earning up to $75,000 and married couples earning up to $150,000. These numbers are much higher than the average income per year for each subgroup.
Heck…I think a freshman congressman would be eligible for a subsidy of married, and spouse didn’t work.