Why Don’t Businesses Embrace Universal Health Care?

Yesterday the California Senate passed SB 562, The Healthy California Act. This bill would create the Healthy California Program to provide comprehensive universal single-payer health care coverage and a healthcare cost control system for the benefit of all residents of the state of California. It would be funded by a combination of employer and employee payroll taxes. Of the 33 developed nations in the world 32 of them have what is known as universal healthcare. The lone exception to this, of course, is the United States. Universal healthcare, however is not defined as government only healthcare, but can include both public and private insurance and medical providers. So if this bill actually passes the assembly and the financial aspects are resolved it would put California on the list of countries with universal healthcare. This would be a very unique situation. One of our states has universal health care but the country does not. But I think the bigger question for this blog is: “why don’t businesses embrace universal health care?”

And I’m not the only one questioning this. Warren Buffett has stated that other countries have gained a five or six point advantage over the United States because of healthcare spending by employers. The National Federation of Independent Business conducted a survey of small business priorities and problems and found that the cost of health insurance is the most severe problem facing American small business today. In fact 52% of small business owners identified it as a critical issue. The Bureau of Labor Statistics (BLS) puts the cost of healthcare in 2016 for employers with more than 500 workers at $4.28 per hour or 9% of the total compensation costs. For employers with 100 to 499 employees the insurance costs are $2.77 per hour worked or 8.5% of total compensation. Now some will say that this cost is due to the Affordable Care Act. But the increase under the Affordable Care Act for employers with more than 500 employees as compared with the cost in 2006 was 1%. For those employers with under 500 employees it was 2.5%. However this statistic does not reflect that many of the employers with under 500 employees did not offer health insurance in 2006. So why do we continue to put this burden on employers and why do they continue to fight to keep it?

Using the 2006 figures so that we do not factor in Obama care, if I were to propose an 8% tax on all employers with over 500 employees there would be riots in the streets. Yet that’s what employers were paying for healthcare. So if we were to take this 8% as a payment from each employer and add in the cost the employee paid could this be the beginning of universal healthcare for the United States. Think about it for a minute. Employers would no longer need to contact insurance companies, negotiate costs, and have someone in the company to oversee the program (an additional cost of a salary) nor have someone in Accounts Payable pay the bill. Would it have to be a federal program? Most countries that have universal healthcare have a combination of national and municipalities handling the programs. The tax would be on the federal level but the healthcare itself is provided on the local level since those are the ones that usually understand what the community requirements are.

Would this help us become more competitive in the world?  Would it help employers become more financially solvent?  Would it get health care for all the citizens of the United States?  The answers to those questions, of course, remained unanswered as of today.  But unless we begin to look into shifting the costs of health care away from employers we will never know.


What do you think?  Take our poll [polldaddy poll=9763126] or leave a comment.

MA Governor Proposes Reinstating “Fair-Share” Assessment

Massachusetts Governor Charlie Baker included a plan to reinstate the “fair-share contribution” formerly assessed against employers without a health insurance plan in his fiscal year 2018 budget.  The assessment would recommence as of January 1, 2018 if passed.  They are intended to partially cover the $600 million shortfall in the state healthcare system (Mass Health) for low-income residents. The fair-share contributions were repealed in 2013 with the advent of the Affordable Care Act.   For more detailed information check out the Associated Industries of Massachusetts blog. 


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New Tax Fraud Scheme

You need to warn your fellow employees and customers that the IRS has announced a new tax fraud scheme.  This time it involved fraudulent Affordable Care Act notices being emailed to individual taxpayers. The IRS has received numerous reports around the country of scammers sending a fraudulent version of CP2000 notices for tax year 2015. Generally, the scam involves an email that includes the fake CP2000 as an attachment.

The CP2000 is a notice commonly mailed to taxpayers through the United States Postal Service. It is never sent as part of an email to taxpayers. The indicators are:

  • These notices are being sent electronically, even though the IRS does not initiate contact with taxpayers by email or through social media platforms;
  • The CP 2000 notices appear to be issued from an Austin, Texas, address;
  • The underreported issue is related to the Affordable Care Act (ACA) requesting information regarding 2014 coverage;
  • The payment voucher lists the letter number as 105C.
Open hand raised, Stop Fraud sign painted
Open hand raised, Stop Fraud sign painted


If Health Insurance is Mandatory…Is it a Mandatory Deduction (for Garnishments)?

The Affordable Care Act has been in full swing for a couple of years now.  However, there appears to still be one more question that needs to be answered.  If health insurance is mandatory then does it now qualify as a mandatory deduction under garnishment rules? Both payroll professionals and employees have been tackling with this question so let’s see what the actual law requires.  The Consumer Credit Protection Act (CCPA) is the governing law when it comes to deducting for garnishments.  It is enforced by the federal Department of Labor. It states that the employer must take the gross wages and minus out all “mandated deductions” to arrive at the disposable pay. The garnishment percentage (such as 25% for a creditor garnishment) is then taken from this amount.  It states clearly that mandated deductions include taxes such as federal and state income tax, FICA taxes, local taxes, and mandated pension plans such as PERS (Public Employee Retirement System).  401(k)s etc. do not count.  So if I am required as an employee to have health insurance is that now mandated.  The answer is easy…NO.  The DOL has been asked by the APA Government Affairs Manager, Bill Dunn, if they planned to change the definition of mandated deductions to include health insurance.  The answer was no they are not.  Although it is mandated that a taxpayer have health insurance it is not mandated that they have the employer’s insurance. They could buy it through the open exchange and by-pass the employer altogether. So as far as the CCPA is concerned health insurance does not reduce the disposable income.

However, always remember that the states can always do less than the CCPA. It is possible that the state may permit the health insurance as a mandated deduction. Many state legislatures are looking at legislation that will adjust their requirements. It would appear on the garnishment you receive if the state permits the deduction.  You should also be aware that state tax levies might also permit the health insurance deduction. For example, Colorado and Virginia have added the deduction from state tax levies.

So to recap…the federal CCPA is not adding health insurance as a mandated deduction for garnishments.  However, the state legislature may or may not pass legislation to permit it as a mandated deduction, you need to check on each state requirements by reading the garnishment.