New IRS Obamacare Rule Guarantees Massive Job Loss

For the last two years many businesses have been warning that because Obamacare will hurt them so badly they will cease offering employees healthcare and dump employees onto the Obamacare exchanges. But now the IRS has ruled that business will not be allowed to do this and this move guarantees that companies will begin a massive wave of layoffs to make up the costs.

An article in The New York Times relays the bad news to employers that no matter what they thought they were going to do, they are stuck with the massive new costs of Obamacare and they won’t be able to escape that massive tax increase by just closing out their healthcare benefits.

“Many employers,” the Times reported on May 25,”had concluded that it would be cheaper to provide each employee with a lump sum of money to buy insurance on an exchange, instead of providing coverage directly.”

When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the Internal Revenue Service said employers could not meet their obligations under the health care law by simply reimbursing employees for some or all of their premium costs.

Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”

If an employer wants to help employees buy insurance on their own, Mr. Condeluci said, it can give them higher pay, in the form of taxable wages. But in such cases, he said, the employer and the employee would owe payroll taxes on those wages, and the change could be viewed by workers as reducing a valuable benefit.

So, what will employers do in response to this “clarification” of IRS rules? Isn’t it obvious? They will begin to fire employees so that they can use those salaries to pay for this massive new tax.

Obamacare will also eventually be responsible also for any new company startup refusing to include healthcare as part of its compensation package in the first place, too.

Of course, some may like the latter idea. After all, liberals have been trying to decouple healthcare coverage from employment for a long, long time. This is their biggest success with that goal to date.

But it will make healthcare more expensive for the individual. Not to mention that perhaps tens of thousands of jobs will be permanently lost as a result.

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  • cirby

    Look to “local outsourcing” being the next new business trend. A bunch of small businesses will start up, each employing only one or two people full time, with a lot of freelance workers on their lists. A company that needs skilled workers will hire those small companies to supply people at a given rate for 29 or less hours per week.

    The next “adjustment” will be a number of medium-sized companies getting into the startup business. They’ll start a “new” company in the same market, close down their old operations, and hire the old employees to fill slots in the new, insuranceless corporation. Often at lower overall compensation than they used to get.

    The targeted employee size, of course, will be something under 49…

    • Commander_Chico

      Yes, I can see that happening. Part of the race to Bangladesh for American workers.

      • cirby

        One more huge job loss to add to the Democrat “lose” column, then.

        • Commander_Chico

          Democrats and Republicans are the Oligarchy party.

          Oligarchs win, workers lose.

  • GarandFan

    Perhaps Nancy-poo and her cohorts should have read that law BEFORE they passed it.

    • Walter_Cronanty

      Wouldn’t have done them any good. These new edicts were promulgated by that fair-handed, expert health-care bureaucracy, the IRS.

  • Sky__Captain

    I want to see where in the (Un)Affordable Care(less) Act this is stated.

    • GarandFan

      It’s not. King Barack the Magnificent and his cohorts just make shit up as they go. Another day, another “rule”. Oh, and “implementation dates” are purely arbitrary. Many won’t go into effect until The King is gone.

      • http://www.traveLightgame.com/ ljcarolyne

        King of the Bull Shit, stinky as Hell.

    • Walter_Cronanty

      The “(Un)Affordable Care(less) Act” put the IRS [which can't even give credible advice on the tax code] in charge. What else do you need to know?

  • alanstorm

    So now the feds will use force to make companies provide health insurance.

    Sounds like typical “progressive” behavior to me.

  • Commander_Chico

    Does anyone that has been in a supermarket, department store, or fast food outlet and seen the low level of service caused by barely minimal staffing think that employees haven’t already been cut to the bone?

    U.S. businesses ceased to have any charitable impulses years ago. Whoever could be laid off, has been laid off.

    • LiberalNightmare

      businesses are not meant to be charities.

      And yeah, they can cut deeper if they have to.

      • jim_m

        Cut deeper? I am amazed at the outrageous degree of over staffing in my current company. Fortune 50 companies have a long way to go before they become anything resembling lean.

        • Commander_Chico

          It might be that your company is billing out those workers to patients, it’s part of the fraud that is healthcare in the USA.

          • jim_m

            We don’t treat patients you dumbass.

          • Jwb10001

            So how do people get paid if the cost of their employment isn’t billed to recipient of the care they provide? How does the company that provides the service stay in business if they don’t bill their customers? Where do you suggest they get revenue?

          • Walter_Cronanty

            From the gubmint – where Chico gets his money.

  • Hank_M

    Is this legal? Yeah, I know, it wouldn’t matter to the libs anyway.
    But still, Obamacare was signed into law June 28th, 2012 and now we have the IRS creating a new ruling on it?
    This would be the 42nd change to Obamacare.
    What the hell did the dems vote on?

    • jim_m

      What they passed was a totem that no one understood and which no one could every fully comprehend, thus allowing them to make any claims that they wished regarding what it is and does and how the law functions. Obamacare is just an empty vessel into which they pour their agenda., whatever that agenda happens to be today.

  • ackwired

    “After all, liberals have been trying to decouple healthcare coverage from employment for a long, long time.”

    The system of coupling healthcare to employment actually was originated by the labor unions. How did it become something that conservatives would defend? No other country in the world does it this way, and it is one of the reasons that US healthcare is the most expensive in the world and one of the reasons that millions have gone without healthcare in our country.

    It’s too bad that employers are not being allowed the choice of providing insurance or referring their employees to Obamacare. Even though it probably would have required a tax increase, it may have been worth it to start the “decoupling” process.

    • jim_m

      Wrong. The reason health care is expensive is not who pays. The reasons are that:

      1) insurance in the US gets many costs shifted onto it, including Medicaid and Medicare, which pay below the actual cost of services as well as from foreign countries with price controls or where the standard of living is so low that they cannot support the cost of the drugs. In the latter case pharmaceutical companies sell drugs at a lower price in these countries and try to make up the low by increasing the price here where they have that ability to make up some margin. (note that the left would be outraged if these companies tried to sell life saving drugs in 3rd world countries at their real cost ). Healthcare tends to cost more because of this cost shifting and a large segment of the population not paying their way for treatment received.

      2) Insurance is high in the US because it tries to cover too much and the costs of this are hidden to the consumer. Because the consumer does not see what the real cost of those Dr visits is, they tend to abuse the system making unnecessary visits that run up costs. Healthcare itself costs more because the system is burdened by people who should not be using it. This unnecessary usage increases costs by increasing the usage and the problem in #1 remains for payment on those unneeded visits.

      Only an idiot (ie a leftist) thinks that the reason something costs a lot is determined by who is paying. The reason things cost a lot is because a lot of work is being done and either people aren’t paying their share or people are wasting money on unneeded goods & services.

      Claiming that healthcare is expensive because the employer pays for the insurance is like saying it is expensive in the US because it is paid for in dollars whereas it is cheaper in the UK because they pay for it in Pounds. The claim is a non sequitur but the left is too ideologically blinkered to realize it.

      • ackwired

        So how did the “right” come to defend the “leftist” system whereby employers provide health care. Be careful now. It will take a lot of twisting to blame everything on the evil left ;-)

        • jim_m

          You are misunderstanding what I said. The only thing that I said was leftist was that the cost was high because of who was paying.

        • Hank_M

          I don’t recall anyone really defending the present system that you define as “leftist”.
          The problem was replacing it with one far worse, passed by one party, taking over approx 1/6th of the economy and putting the govt in charge of it. The same govt that can’t balance its’ own budgets, can’t secure its’ borders, can’t control waste and runs so many duplicate programs it’s ridiculous.
          The problem was passing a law that hadn’t yet been finalized and that had no one had read.

        • http://wizbangblog.com/author/rodney-graves/ Rodney G. Graves

          Employer paid health insurance as a fringe benefit was a consequence of wage controls under the administration of the bad Roosevelt.

          HETL

    • alanstorm

      “The system of coupling healthcare to employment actually was originated by the labor unions.”

      Incorrect. It was started to get around FDR’s WWII wage restrictions.

      ” No other country in the world does it this way…” No other country is the US. Do you have a point, other than “All the COOL countries are doing it!”?

      “…it is one of the reasons that US healthcare is the most expensive in the
      world and one of the reasons that millions have gone without healthcare
      in our country.”

      Incorrect. Jim_m has already answered that.

      In any case, the idea of using coercion to make companies provide health insurance is abhorrent.

      • ackwired

        I think a thorough investigation will reveal that labor unions negotiated healthcare into their contracts.

        “No other country does it this way” is a statement of fact. It provides an opportunity to look for correlations.

        Jim did not answer the cost question. He argues that it is not the only cause of the high costs in the US. Some of the causes he cites are arguably caused by having employers provide healthcare.

        Glad that you agree the coercion is bad. Please reconsider whether any benefits are derived from the system.

        • jim_m

          I said that it wasn’t that employers pay for healthcare, but that it is the fact that consumers do not see the actual cost and therefore are willing to spend indiscriminately.

          This is an artifact of people not seeing what the full cost of insurance is and having little visibility to what the cost of healthcare is. This is not because insurers provide insurance, this is because insurance is paying for so much of well/healthy visits that people are not careful about abusing the system and overloading it.

          The difference is that on the right we point out that it is a problem with the nature of insurance and what it covers and on the left you complain that it is who pays for it. The problem will still exist if employers do not provide insurance but government does. It will continue to exist as long as insurance covers too much and people do not see what the actual costs are.

          • Vagabond661

            It’s also why I am for us writing a check every payday to the government for taxes owed. After seeing that money physically disappear from our bank accountevery payday, we would want the government to be more prudent with our money

          • ackwired

            Well, you repeatedly insist that I am a leftist and not a moderate libertarian, and I say that the high costs are in part because the cost is hidden to the consumer. I might point out that it is hidden by fact that them employer pays the bill instead of the consumer. But to confuse that with an either/or argument is to split hairs just to preserve an ideological prejudice.

          • jim_m

            I insist that you are a lefty because you take lefty stands and in this case you are demanding government control over healthcare (not a libertarian position) and you do so with the most outrageously ignorant positions and statements.

        • jim_m

          labor unions negotiated healthcare into their contracts.

          OK. Let’s separate 2 things. Healthcare does not equal insurance. We can both agree that both healthcare and insurance cost too much.

          In the case of union contracts I would point to the experience in Wisconsin where the teacher’s union contract forced the state to use the teacher’s union run insurance, which was far more costly than insurance provided by a regular insurance provider. When the state passed a law that voided these provisions the school districts saved millions of dollars.

          Insurance costs for union workers are obscenely high because they use union run providers which are wasteful and corrupt and they also have high end plans that cover everything. Breadth of coverage impacts cost of insurance.

          In nearly all of your comments you conflate cost of insurance with cost of healthcare.

          • ackwired

            The vast majority of consumers pay for insurance, not for healthcare. But I understand your distinction. I’m sure that you also understand that I was referring to employer provided insurance, not the insurance provided by trade unions. But both contribute to higher costs. So the distinction does not effect the conclusion.

          • jim_m

            No. The vast majority of consumers pay for both and they pay for healthcare both directly as well as through insurance.

            Yes, the distinction is significant. There are costs that are directly related to delivery of healthcare goods and services. These are entirely unrelated to insurance issues and will not change if you change the way insurance is delivered. The fact that you claim there is no difference is an epic display of willful ignorance.

            Separately, there are costs specifically related to the insurance industry. The ability to spread risk across large pools is directly affected by government regulation and results in much higher cost of insurance which is in no way related to the cost of healthcare.

            If you are going to say anything on this issue you would do well to at least understand the issues on a basic level. Your claim that the distinction between healthcare and insurance is a distinction without a difference is outrageously stupid. It demonstrates someone so totally disengaged from the subject that their opinions are entirely worthless and should be address with the utmost contempt and ridicule.

            You claim to want a civil discourse but you come to the discussion armed only with ignorance and lies.

          • ackwired

            As usual you refuse to address what I actually write, and assign any view to me that you want to argue with. Some things never change.

          • jim_m

            I am arguing your premise. Your premise is that the cost of healthcare and the cost of insurance are one and the same. The fact is that they are different and they are influenced by different issues. Reducing the costs for either of them requires different solutions. What would help with one issue would be irrelevant to the other.

            If you cannot recognize this basic fact then there is no discussing anything with you because your ideas about what the problem is are totally wrong. There can be no reasonable discussion because you aren’t even discussing anything based in fact.

          • ackwired

            But it is your premise, not mine. Your typical argument is, “you said A, therefore you believe B. Only a (leftist, idiot, fool, liar, etc.) would believe B. Therefore you are one or all of the above. You don’t need me to do this. Just rave on.

          • jim_m

            For there to be any discussion people have to agree on the base assumptions. Your’s are false and based on an incorrect understanding of the situation. Now you complain that I am making a silly argument. What you’re really upset about is that I won’t argue on your falacious premise.

          • ackwired

            What I am complaining about is that you make up and assign me an underlying assumption with which you want to argue. You don’t care what I believe. You don’t even bother to find out. You just make it up, making sure that it fits your dualistic view of the world. It is rude. It is insulting, and it gets very tiresome.

        • alanstorm

          Under this “plan”, we will end up with no better, and likely worse care, at greater cost.

          ” Please reconsider whether any benefits are derived from the system.” The ends justify the means for you.

          • ackwired

            I don’t see how your comment even considers mine, let alone applies to it. I assume your primary purpose was to attack me. But could you please try to reword your point using a train of logic? Thx.

        • westcoastwiser

          Hmmm… the unions at my German HQ have health benefits negotiated into their agreements…

    • jim_m

      millions have gone without healthcare in our country.

      Bullshit. Millions are not going without healthcare in the US. People may not have insurance but that does not mean that they go without healthcare. People may not get every possible treatment available but that does not mean that they go without healthcare.

      That statement is not simply an exaggeration, it is a flat out lie and a slander on every healthcare worker in the nation; declaring them to be heartless mercenaries who will let people suffer and die if they don’t have money. I suggest that you make sure that you tell every doctor and nurse that treats you and your family that this is what you think of them.

      • ackwired

        You are just ranting about semantics. If you want to have a serious, adult, conversation about this, let me know. If you want to continue screaming about my evil nature and intent, feel free to continue.

        • jim_m

          Your statement is demonstrably false. Millions of people are not going without healthcare.

          If YOU want to have an adult conversation you could start by not trotting out bogus partisan lies.

          • ackwired

            I assume that you learned political discussion from cable news. They operate on the premise that conflict is good television (and it is). So multiple interruption, insults, and distortions of others positions is the norm. Unfortunately, this approach does not aid anyone in getting to the truth, and does not produce adult discussions.

            I know many people who did not have insurance prior to Obamacare. They did not seek care unless the need was extremely urgent, putting off any kind of preventative measures or therapies. Getting affordable insurance has allowed them to tread their high blood pressure, get a checkup after years of not seeing a Doctor etc. They knew that they could go to an ER and receive treatment regardless of their ability to pay. But they did not. Not unless it was a dire emergency.

            The idea that these people were receiving health care is subject to interpretation. Certainly not as black and white as you wish to paint it.

        • westcoastwiser

          The adult police are now here!

  • http://www.traveLightgame.com/ ljcarolyne

    Does anything the POS Usurper rules, not cost kazillions to all Americans? Hateful Devil.

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