2013 Means Higher Taxes, More Uncertainty from Health Care Law

Jan 2, 2013

On the health care front, businesses are bracing for higher taxes and continued uncertainty in 2013 as they prepare for hardest-hitting chunks of the PPACA to go into effect in 2014.

Thanks to the PPACA we have a new 3.8% tax on investment income for high earners and a 2.3% tax on medical device revenue. The former will retard economic growth, while the latter could cost thousands of jobs.

The Wall Street Journal reports that the uncertainty stems from businesses preparing for 2014:

Certain employers could see health-related costs go up as a result of the law's requirements, and they are weighing how to respond. One possibility would be to opt out of providing health coverage altogether, as employees will have new coverage options outside the workplace—for the employer, the penalties are lower than the typical cost of insurance. But employers are considering a range of more moderate steps to limit their expenses. Decisions will need to be in place well before next fall, when benefits enrollment typically begins and the new exchanges are supposed to begin operating.

Some companies will see higher costs in 2014 because “as workers who had opted out of such plans in the past decide to take them because of the individual mandate.” Other companies will see their health care costs rise because the health insurance they currently offer won’t meet the minimum level dictated by Washington bureaucrats. 

As has been written here, many small businesses will try to keep under the magical 50 employee threshold to avoid the employer mandate while other companies will cut workers’ hours and use more part-time workers to limit costs.

Federal regulators who rushed through new regulations only added to the uncertainty businesses face as they learn what their implications are.

In 2013, companies are thinking very carefully about what they will do. Bryce Williams of consulting firm Towers Watson told the Wall Street Journal, “They want to measure twice and cut once.”

Hey, at least the dormant Community Living Assistance and Support Services (CLASS) program, an attempt in the PPACA to provide long-term health care that the administration admitted wasn’t economically feasible, was repealed in the fiscal cliff bill and won’t rise up like a Walking Dead zombie.

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