Tuesday, November 13, 2012

Obamacare possibilities?

Following my post the other day, Time to realize what you voted for, some folks I know started discussing the possibilities. One theory advanced was that temp employers would not fuck the temps, but would instead fuck their permanent employees. It would work like this: rather than cut everyones' hours, or turn temps into 1099 contractors (a possibility that is subject to legal hurdles, which I will discuss later), temp agencies would offer all of their full-time employees health insurance, but would pay for little or none of the cost. In other words, the agency would get its temps the group rate the agency has access to, but would contribute nothing to the cost.

My familiarity with the tax and Obamacare implications of this strategy is limited. I haven't heard anyone in industry advance this proposal, which leads me to believe that they have lawyers who have told them it wouldn't work. But I don't know. I do know that the current system is rooted in World War II, when the federal government (probably unconstitutionally, but that is an argument for another day) froze wages. To allow businesses to attract employees, the feds created a system where employers could offer benefits in lieu of wage increases. In exchange for tax benefits, employers could give employees better pensions or health insurance instead of wage increases. This, of course, laid the groundwork for the unions negotiating the auto companies into ruin. The auto makers failed to realize the market might change, and so gave the unions contracts that included benefits that made the industry unsustainable. But that is a discussion for another day. And please, don't argue that GM and Chrysler aren't still circling the drain. It is unbecoming. But I digress.

In any event, I have no idea whether a fuck-everyone approach would work for the agencies. I suspect that they would garner no tax benefits if they paid nothing for their employees' health insurance, but I don't know if they could do that and escape Obamacare penalties or mandates. Any tax lawyers (or newly spawned healthcare lawyers) out there know the answer?

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