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View Diary: 300,000 Arizonans win, will get Medicaid (70 comments)

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  •  Q & A at Correntewire (1+ / 0-)
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    Affordability & Subsidies

    Coverage may be unaffordable for low-wage workers

    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.

    With such a small income, "there is just not any left over for health insurance," said Shannon Demaree, head of actuarial services for the Lockton Benefit Group. "What the government is requiring employers to do isn't really something their low-paid employees want."

    Based in Kansas City, Mo., Lockton is an insurance broker and benefits consultant that caters to many medium-sized businesses affected by the health care law. Actuaries like Demaree specialize in cost estimates.

    Another thing to keep in mind: premiums wouldn't be the only expense for employees. For a basic plan, they could also face an annual deductible amounting to $3,000 or so, before insurance starts paying.

    "If you make $20,000, are you really going to buy that?" asked Tracy Watts, health care reform leader at Mercer, a major benefits consulting firm.

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