In early 2021, a American Rescue Plan (ARP) included provisions that increase the tax bill for Affordable Care Act (ACA) enrollees in the marketplace. This made all income earners eligible for higher taxes and eligibility for those with incomes above 400% of the poverty level for the first time.
Premium tax payments are designed to help the uninsured get coverage and help the economy recover from the epidemic. They are designed to artificially reduce the cost of health insurance while allowing people to choose the policy that was the cheapest in the market. These expensive tax dollars do not reduce the cost of care or improve the quality of care health care in America, but it only allows tax dollars to make the cost seem low to the right people.
The health market saw an incredible increase in registrations in January 2022. And even though the tax increase that caused people to sign up ends at the end of this year, which passed only the tax years 2021 and 2022, the effects of this increased. premium taxes have shown that single-payer health care may be on the horizon.
Read more: What does the Inflation Reduction Act mean for employer-provided health plans?
The design was successful. In some ways, very successful.
Some businesses have seen higher tax rates rise and found their bottom line to be lower health plans and allowing workers to purchase health insurance through the exchange has increased costs for their employees and their organizations. In this way, employers remove themselves from the insurance purchase equation and allow their employees to directly interact with the ACA market to secure health insurance (and a reflection of the cost of the tax credit they will receive).
As more businesses understand the value of financial resources for themselves and their employees, this trend will continue to grow. When thousands or millions of Americans remove their decision to buy health insurance from their employers and have access to tax dollars, we now have a system where the cost is being made from one party (the American government). In other words: single payer.
Initially, we found that small businesses with fewer than 50 employees and non-profit organizations would benefit most from this system. This is because there is no penalty for employers not to provide support to their employees. Another reason is that their working wages are very low while additional income is an important part of the equation. We’ve seen employers save half of their budget by using this method.
Read more: Open enrollment cheat sheets: Pros and cons of FSA, HSA, and HRA pre-tax benefits
What if employers could eliminate the burden of providing health insurance, save money, increase wages and savings and have access to affordable health care for their employees?
This is the current incentive for the ACA’s market tax increase. It is tempting employers to drop their health plans and allow their employees to enter their own market.
As brokers and advisors, we need to be aware that since the increase in taxes was extended until 2025 under the Inflation Reduction Act, the inflation rate of the single payer may be a permanent change. Here are some important points to consider as the government continues to step in and attract companies:
- Employees who receive employer benefits are not eligible for this benefit. In places where employers struggle to provide health insurance, their employees are more likely to raise wages than employers pay. Such a move would help them take advantage of the support and choose plans that suit their needs.
- Many business leaders are tired of the health insurance coverage. They feel they have no control, and it’s a problem that continues to grow within their business. If brokers/advisors aren’t following these business leaders with cost-cutting strategies that improve employee well-being and lower costs for employers, then expect a big change. Dropping health insurance is one option these tired business leaders can take.
Read more: Time to change our health messages to motivate and train employees
- Disadvantages exist for large groups who decide to stop being paid by their employers because of the penalties they may receive. However, if the subsidy is increased or changed, the employer’s penalty is the only thing that stands out among the major groups and only restricts their coverage in order to access the ACA market with an increased tax credit. I believe that the government would be happy to try to remove the employer penalty at that time.
- Major health insurance companies that exited the market years ago are re-entering after seeing strong enrollment and a stable environment. This shows a stable environment.
- A decision will be made soon if these additional taxes will remain in place. Premium tax increases can be repealed, changed, changed or become the next political football that happens every few years in American politics.
These resources can be a sign of something much bigger.
Discussing this issue is a concern for counselors and employers to think about and think about because it is so complex in the way we do business. It also reflects the changing climate in our industry and brings what employers are recruiting to their employees. However, successful business leaders and consultants know that with change comes great opportunity, so we need to know what’s in this crisis.
How all this will happen is difficult to predict, but the current trend is increasing. I believe we are seeing signs of a bigger story unfolding before us. Businesses and individuals who take advantage of this information, it is difficult to get the value taxes removed. This would have made the additional tax increases in the ARP a Trojan Horse into a single-payer model.
As brokers and advisors, we must be prepared.