It's called the Affordable Care Act, but
President Barack Obama's health care law may turn out to be unaffordable for many low-wage workers, including employees at big chain restaurants, retail stores and hotels.
This seems counter intuitive to many, but it appears to be the absolute truth.
That might seem strange since the law requires medium-sized and large employers to offer "affordable" coverage or face fines.
But what's reasonable? Because of a wrinkle in the law, companies can meet their legal obligations by offering policies that would be too expensive for many low-wage workers. For the employee, it's like a mirage — attractive but out of reach.
Well that’s okay because employees can then get tax benefits to help them afford private health insurance right?
Well not exactly!
The company can get off the hook, say corporate consultants and policy experts, but the employee could still face a federal requirement to get health insurance.
Many are expected to remain uninsured, possibly risking fines. That's due to another provision: the law says workers with an offer of
"affordable" workplace coverage aren't entitled to new tax credits for private insurance, which could be a better deal for those on the lower
rungs of the middle class.
Sounds very much like a Catch 22!
The law is complicated, but essentially companies with 50 or more full-time workers are required to offer coverage that meets certain basic standards and costs no more than 9.5 percent of an employee's income. Failure
to do so means fines for the employer. (Full-time work is defined as 30 or more hours a week, on average.)
But do the math from the worker's side: For an employee making $21,000 a year, 9.5 percent of their income could mean premiums as high as $1,995 and the insurance would still be considered affordable.
Even a premium of $1,000 — close to the current average for employee-only coverage — could be unaffordable for someone stretching earnings in the low $20,000's.
So companies will follow theprovisions of the law, will be in compliance and not subject to fines and low
income earners will in many cases still not be able to afford health insurance coverage for themselves and their families.