# Under the ACA, what is the consequence for not paying for insurance for your employees? **URL:** \ **Category:** Factual Questions\ **Created:** [March 26, 2014, 3:58am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580 "2014-03-26T03:58:28Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [March 26, 2014, 3:58am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/1 "2014-03-26T03:58:28Z")
At the bottom of [this SCOTUSBlog article](http://www.scotusblog.com/2014/02/symposium-how-to-understand-hobby-lobby/#more-205491), it says: > [@](#): > > [A large employer who does not want to pay for insurance for its employees] has the much less draconian [than reducing its workforce] legal option of increasing its employees’ wages in lieu of such insurance coverage . . . in which case the employees will be able to purchase an insurance plan that includes the same federally mandated minimum protections to which everyone else is entitled. That seems to be saying that if you don’t want to pay for insurance, you’re in the clear, legally, as long as you increase your workers’ pay by some amount. (What amount?) But at [obamacarefacts.com](http://obamacarefacts.com/obamacare-employer-mandate.php), I read that if you do not offer to pay for employees’ health coverage, then you must pay a fee of $2000 per year per employee (more or less). These aren’t in direct contradiction, but they don’t seem plausibly to go together. Since the second cite is from the administration itself (I think), it seems likely to be right. But the first cite seems to be written by someone who by all rights should know his/her stuff. So what is that person referring to when they say a company can just pay its employees extra money and be in the clear? (Also, btw, the fine is just $2000 per year? Compared to the cost of insurance coverage isn’t that chump change? Why don’t companies just take that option?) ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [March 26, 2014, 4:04am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/2 "2014-03-26T04:04:39Z")
Regarding my last question in parentheses, I forgot that a few (though on research I find it’s very few) large employers don’t already offer health insurance. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [March 26, 2014, 4:57am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/3 "2014-03-26T04:57:04Z")
I believe from what I’ve read that the employers who choose that route can do both. If you do not provide a plan, you pay a fine of $2,000 per employee if the employer meets certain criteria - number of employees, or some such. No getting out of that. The judge was just suggesting anyone who felt so strongly that the law was wrong to force them to provide morning after pills and IUD’s, she said they could instead choose to pay the fine, and then since current plans cost a lot more than $2.000 per employee, the employer could choose to (not forced to) up the salary of their employees so they could afford their own good insurance. I suppose they could also just pay the fine and screw any raise idea - but the whole argument at SCOTUS was that the companies felt morally obligated to provide health coverage (I assume it’s in the bible somewhere) but not abortion-inducing material. The women judges were asking “what’s the problem? If you don’t want to buy the mandated plan, then Plan B (so to speak) is to pay the ‘tax’ instead and maybe help your employees with buying personal plans that they choose themselves to meet their needs.” ---
**Author:** ![dstarfire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dstarfire/32/5762_2.png) [@dstarfire](https://boards.straightdope.com/u/dstarfire)\ **Post date:** [March 26, 2014, 5:14am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/4 "2014-03-26T05:14:08Z")
I think you’ve got your trustworthiness priority backwards. I’d trust a private law blogs analysis over non-binding information published by the folks championing the program. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [March 26, 2014, 6:16am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/5 "2014-03-26T06:16:57Z")
I believe he’s just confused over the wording. You must either buy your employees a plan or pay the “tax” of $2,000 per." Giving the employees a raise is an optional extra, it in no way gets you out of the $2,000 per for failing to provide the plan. It just softens the pain for the employee to get a bit extra. So if you give them enough of a raise to cover the minimum plan, it will cost you that plus $2,000. And to meet that standards, the employee’s plan will probably have contraception included. Any employee who does not want to pay for a contraception plan will pay the individual “tax” plus then either they get a no-IUD plan (plus paying the tax) or they pay each doctor fee with cash plus pay the tax. Nobody is forced to buy a plan covering birth control. They simply must choose either the plan, or the tax - at which point they also need to think what they are doing to cover any medical costs. Presumably if there is a big enough demand, someone will sell Bible-friendly plans. I suspect they won’t be much different in price than compliant plans. ---
**Author:** ![Senegoid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senegoid/32/6606_2.png) [@Senegoid](https://boards.straightdope.com/u/Senegoid)\ **Post date:** [March 26, 2014, 7:16am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/6 "2014-03-26T07:16:19Z")
> [@md2000](#): > > The judge was just suggesting anyone who felt so strongly that the law was wrong to force them to provide morning after pills and IUD’s, she said they could instead choose to pay the fine, and then since current plans cost a lot more than $2.000 per employee, the employer could choose to (not forced to) up the salary of their employees so they could afford their own good insurance. I can’t imagine why in a million years any company would do this. _Voluntarily_ give every employee a $2,000 pay raise in lieu of insurance, _on top of the $2,000 fine?_ Unimaginable. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [March 26, 2014, 7:35am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/7 "2014-03-26T07:35:05Z")
> [@Senegoid](#): > > I can’t imagine why in a million years any company would do this. _Voluntarily_ give every employee a $2,000 pay raise in lieu of insurance, _on top of the $2,000 fine?_ > > Unimaginable. Probably for much the same reason why the company gave the employees health insurance when there was no law mandating it. I think we’ve all forgotten that until the ACA was passed, companies did not have to give their employees any health benefits whatsoever. But many did. Perhaps they felt it led to more loyal or healthy employees. Perhaps they felt a moral obligation. Perhaps it was some combination of the above or something else. Whatever the motivation was to pay for health insurance, it didn’t end when the ACA was passed. And when I look at my 2013 W-2 form it says that my employer subsidized my health care to the tune of $9000. Paying your employees and the government each $2000 would be a bargain. ---
**Author:** ![Claverhouse](https://avatars.discourse-cdn.com/v4/letter/c/13edae/32.png) [@Claverhouse](https://boards.straightdope.com/u/Claverhouse)\ **Post date:** [March 26, 2014, 8:31am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/8 "2014-03-26T08:31:50Z")
American healthcare is weird. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [March 26, 2014, 9:46am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/9 "2014-03-26T09:46:16Z")
> [@Alley\_Dweller](#): > > And when I look at my 2013 W-2 form it says that my employer subsidized my health care to the tune of $9000. Paying your employees and the government each $2000 would be a bargain. I wonder if there is some tax advantage to your employer to somehow exaggerate the cost of your plan? Maybe they pay the $9000 and then get some kind of year-end rebate. Or they get free cover for their own families? ---
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [March 26, 2014, 10:56am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/10 "2014-03-26T10:56:19Z")
> [@dstarfire](#): > > I think you’ve got your trustworthiness priority backwards. I’d trust a private law blogs analysis over non-binding information published by the folks championing the program. It seems extremely unlikely to me that this particular piece of information would be false. But in any case, one can simply look it up in the law itself if one is suspicious. Or google it. (Which I did–I just linked to the one site I did because, as I said, it seemed implausible to me that it’d be unreliable on this particular piece of information.) ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [March 26, 2014, 10:57am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/11 "2014-03-26T10:57:04Z")
> [@bob\_2](#): > > I wonder if there is some tax advantage to your employer to somehow exaggerate the cost of your plan? Maybe they pay the $9000 and then get some kind of year-end rebate. Or they get free cover for their own families? No tax advantage to my employer- I work for a state government. My insurance costs the state 18,000 a year and I contribute another $4-5000 to the premiums. ---
**Author:** ![crucible](https://avatars.discourse-cdn.com/v4/letter/c/5f8ce5/32.png) [@crucible](https://boards.straightdope.com/u/crucible)\ **Post date:** [March 26, 2014, 11:56am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/12 "2014-03-26T11:56:57Z")
Why is there a deadline for signing up for insurance? If an insurance company is willing to sell a policy to an individual ‘after the deadline’, what prevents it? Is the government paying the insurance company part of the cost of the insurance, giving them the right to restrict when the policy can be sold? I understand that deadlines are there to prevent folks from waiting until they get sick to buy the insurance…I guess that is what it amounts to…but if an insurance company wants to do business with me on April 2nd, what prevents it? ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [March 26, 2014, 12:26pm UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/13 "2014-03-26T12:26:07Z")
> [@Alley\_Dweller](#): > > Probably for much the same reason why the company gave the employees health insurance when there was no law mandating it. > > I think we’ve all forgotten that until the ACA was passed, companies did not have to give their employees any health benefits whatsoever. But many did. Perhaps they felt it led to more loyal or healthy employees. Perhaps they felt a moral obligation. Perhaps it was some combination of the above or something else. Whatever the motivation was to pay for health insurance, it didn’t end when the ACA was passed. > > And when I look at my 2013 W-2 form it says that my employer subsidized my health care to the tune of $9000. Paying your employees and the government each $2000 would be a bargain. I think this was the point of Sotomayor’s question during the hearing. If you desperately want to ensure your employees have coverage but refuse to buy an approved plan, then why can’t the employer pay the $2000 fine and give the employees a raise for the difference? Then they can buy their own health care." In that example above, $7,000. I believe she mentioned too that $2,000 was a lot less than any approved health care plan so there would be plenty left over for raises. The only gotcha I see is that it would be illegal I presume to give raises that depended on marital status; not sure about raises based on number of dependants. But then, you’re straying into debate territory. Would a Christian so principled they objected to health care then proceed to reward employees living in sin, or divorced (“What therefore God hath joined together, let no man put asunder…”) Of course they are already paying for / rewarding those sinful employees if they have an existing plan. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [March 26, 2014, 3:52pm UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/14 "2014-03-26T15:52:17Z")
> [@crucible](#): > > Why is there a deadline for signing up for insurance? > > If an insurance company is willing to sell a policy to an individual ‘after the deadline’, what prevents it? Is the government paying the insurance company part of the cost of the insurance, giving them the right to restrict when the policy can be sold? > > I understand that deadlines are there to prevent folks from waiting until they get sick to buy the insurance…I guess that is what it amounts to…but if an insurance company wants to do business with me on April 2nd, what prevents it? Even pre-ACA insurance companies would insist on a waiting period before coverage began. If they determined that you bought coverage after an illness began the could call it a pre-existing condition and refuse to pay. I doubt it would be different now. I actually looked into short term insurance post-ACA rather than a short ACA enrollment prior to age 65 - it had a long list of pre-existing exclusions. ---
**Author:** ![wevets](https://avatars.discourse-cdn.com/v4/letter/w/e9a140/32.png) [@wevets](https://boards.straightdope.com/u/wevets)\ **Post date:** [March 26, 2014, 3:58pm UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/15 "2014-03-26T15:58:47Z")
> [@crucible](#): > > Why is there a deadline for signing up for insurance? The deadline isn’t to sign up for insurance. The deadline is to sign up for insurance _without having to pay a tax penalty on tax year 2014._ > [@](#): > > but if an insurance company wants to do business with me on April 2nd, what prevents it? Nothing at all prevents it. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [March 26, 2014, 7:50pm UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/16 "2014-03-26T19:50:00Z")
> [@Frylock](#): > > That seems to be saying that if you don’t want to pay for insurance, you’re in the clear, legally, as long as you increase your workers’ pay by some amount. (What amount?) > > But at [obamacarefacts.com](http://obamacarefacts.com/obamacare-employer-mandate.php), I read that if you do not offer to pay for employees’ health coverage, then you must pay a fee of $2000 per year per employee (more or less). > > These aren’t in direct contradiction, but they don’t seem plausibly to go together. I think the first point is simply business, while the second point is legal. In other words, point 1 is saying that an employer who does not offer health insurance (at least in an industry where it is common for an employer to do so) will have to offer a higher salary to its employees, so that their compensation is comparable to the total compensation that employees receive (via lower salary + HI) at that employer’s competitors. Point 2 is the legal requirement – such an employer (provided that it has 100 or more employees) would also have to pay a fine to the government. ---
**Author:** ![Leo\_Bloom](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/leo_bloom/32/10377_2.png) [@Leo\_Bloom](https://boards.straightdope.com/u/Leo_Bloom)\ **Post date:** [March 26, 2014, 7:58pm UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/17 "2014-03-26T19:58:00Z")
> [@Senegoid](#): > > I can’t imagine why in a million years any company would do this. _Voluntarily_ give every employee a $2,000 pay raise in lieu of insurance, _on top of the $2,000 fine?_ > > Unimaginable. It is not a fine. Remember. Fine=un-Constitutional. Tax=Constitutional. You are wrong, wrong, wrong. Please remember it is a tax. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [March 26, 2014, 8:16pm UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/18 "2014-03-26T20:16:53Z")
> [@Leo\_Bloom](#): > > It is not a fine. Remember. Fine=un-Constitutional. Tax=Constitutional. > > You are wrong, wrong, wrong. Please remember it is a tax. As I was just told in a previous thread, that only applies to the individual mandate. Congress does have the power to fine companies under the interstate commerce clause. Frylock, in case it wasn’t clear, while Hobby Lobby has the option of not offering their employees insurance and paying a fine, they have chosen not to do this. Their stated reasoning is that they believe their workers deserve health insurance. The argument in the blog appears to be that they can do this by just increasing their employees wages enough that they can buy plans on the market. In other words, there is already a remedy for the specific situation, so the court has no need to provide a religious exemption for the company. Because, what Hobby Lobby wants to do is provide insurance themselves but not provide for emergency contraception. Unfortunately, the fines for doing that are much higher than just not providing insurance at all. ---
**Author:** ![Iggy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/iggy/32/3364_2.png) [@Iggy](https://boards.straightdope.com/u/Iggy)\ **Post date:** [March 27, 2014, 1:45am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/19 "2014-03-27T01:45:28Z")
The catch with the pay the fine and give a raise to the employee to buy their own strategy is in the tax code. Suppose the per employee premium is $10,000 per year. The company pays 80% ($8000) of the premium and the employee 20% ($2000). If the company chooses to pay the tax and give employees a raise to buy their own cover then the raise must be much more than $8000, on average. And that is because the medical insurance premiums are considered a cost of doing business while the extra income to the employee is taxable. The employee then _might_ be able to deduct premiums, but generally only if they [itemize](http://www.irs.gov/taxtopics/tc502.html)and have high medical expenses. The young and healthy basically lose out. So the cost to the employer of the pay the tax and give a raise strategy may be a more than 25% increase in expenses in this area, if the employer wishes the employee to come out no worse off financially. It is not an approximate wash as the justices implied. ---
**Author:** ![Projammer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/projammer/32/559_2.png) [@Projammer](https://boards.straightdope.com/u/Projammer)\ **Post date:** [March 27, 2014, 4:23am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/20 "2014-03-27T04:23:12Z")
> [@Senegoid](#): > > I can’t imagine why in a million years any company would do this. _Voluntarily_ give every employee a $2,000 pay raise in lieu of insurance, _on top of the $2,000 fine?_ > > Unimaginable. Unless, you know, the prospective employee starts asking about benefits for working with this large company. Oh? No insurance and you’re offering the same salary as your competitor who does offer insurance. I’ll get back to you on that. Have a nice day. It’s not so much an employer’s market that job seekers can’t shop around. Or won’t continue to shop while marking time. [Next page](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580.md?page=2)