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Kyler Biegalski
Scott H. Wang
ACCTG220 Payroll Accounting
November 28, 2015

Obamacare: Employers and Employees

Many people ask themselves, what is Obamacare and how does it affect me? The Patient
Protection and Affordable Care Act is a healthcare and health insurance bill passed by the senate
on December 24, 2009, a few months later on March 21, 2010 it was passed by the house. On
March 23, 2010 it was signed by President Obama creating the law. It was challenged in the
Supreme Court and was upheld on June 28, 2012. Some other names this bill is known as are,
Affordable Care Act (ACA), Affordable Health Care Act (AHCA), Obamacare, or PPACA. The
bill helps give all Americans access to health care regardless of income or wealth. The bill
requires that all American Citizens, including green card holders and resident aliens to have a
minimum level of health care coverage, and certain business groups to provide health care
coverage to their employees (Smith 1). By doing this they must fund this and one of the major
ways they have decided to fund this bill is to tax high earners and those who fail to comply with
the bill (Obamacare Bill).
One of the main reasons that Obamacare was created is due to the steadily increasing
prices of healthcare. Though due to the increase in upfront costs to the employees, employers and

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companies can save some upfront costs on the insurance. Some interesting information on the
steady increases in insurance costs are as follows:

Health insurance premiums rose just 3.8 percent this year, with workers paying
$1,071 of the average $6,251 cost for individual coverage through their jobs,
according to the report. Deductibles, however, climbed about 9 percent, and
workers now pay an average of $1,077 a year in up-front medical costs for a
single-person plan.
The trend has held over the past half-decade. Since 2010, deductibles are up 67
percent, while insurance premiums are up 24 percent. Worker earnings, by
contrast, rose just 10 percent over that period, according to Kaisers analysis of
Bureau of Labor Statistics data. (Tracer 1)

As you can see, more of the insurance costs have been pushed over towards employees instead of
the employers. This is a tradeoff of sorts, the company can continue providing quality healthcare
to employees and their families by shifting some of the costs over to the employee. One of the
major points of the Patient Protection and Affordable Care Act (PPACA) is the Cadillac Tax. The
Cadillac Tax will put a 40% levy on health plans considered to be high-cost starting in 2018. If a
plans premiums exceed $10,200 for an individual or $27,500 for family premiums they will be
subject to this tax (Tracer 3). Many American employers and employees might see reason to
remove this tax; but removing the Cadillac Tax could cause many problems. repealing the
excise tax would add $91 billion to the federal budget deficit over the next decade, according to
the Joint Committee on Taxation (Hoover 1).

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Obamacare isnt working out completely as intended, some smaller companies are taking
the brunt of the increased taxes needed to pay for this bill. Recently some companies had an
increase in health insurance costs from 4.5 percent to 9 percent due to increased taxes on health
insurers (Hoover 1). Congress voted to increase taxes on many health insurers to reduce the costs
and to prevent cost cuts from other government funded projects, this led to the taxes being
passed on towards the companies paying for the health insurance for their employees. That tax
is projected to raise around $150 billion over 10 years. Thats a lot of added costs for small
businesses, but its also a lot of money for Congress to offset if the tax were repealed (Hoover
2). This has created a living nightmare for some small business who dont have the income to
pay these large increases in prices. Many of these small businesses may be force to have layoffs,
cutbacks in insurance, and delayed hiring due to this (Hoover 3).
One major hindrance to some companies with employee numbers between 51 and 100
were quite worried that early next year they would be moved to the small company insurance.
This would most likely lead to increased tax rates for those small companies (Hoover 1).
President Barrack Obama recently signed into effect the Protecting Affordable Coverage for
Employees Act (PACE), this gives states the option to increase the health insurance marketplace
for small companies to include companies with up to 100 employees (Hoover 1). This should
help prevent high health insurance costs to employers, which leads to increased premium costs to
employers. David French, senior vice president for government relations at the National Retail
Federation, said We hope that the PACE Act will help open the legislative gates to additional
ACA fixes such as restoring the 40-hour workweek, repealing the Cadillac Tax and correcting
the laws dysfunctional reporting requirements (Hoover 1).

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With the introduction of Obamacare, many people seem to forget that this is also a tax
bill and that it will affect their income tax filings. Some people may be expecting refunds and
end up owing money, or a much smaller refund than initially expected (Obamacare Tax). Now
this may help some people instead of hurting them with subsidies:
In fact, H&R Block estimated that up to one half of the approximately 6.8
million taxpayers who received subsidies in 2014 may owe the IRS. The Times
reported that 85% qualified for tax credits to offset their premiums, and many
were paid in advance. Taxpayers will be unhappy if they thought they were
getting a refund, but are getting no refund and actually owe the IRS (Obamacare
Tax).
Another major change this brought about was a 3.8 percent net investment tax. This was created
to fund The Patient Protection and Affordable Care Act. This was created in 2010, took effect in
2013 and will be shown on the tax returns filed in 2014 (Obamacare tax). People throughout the
United States, employed and unemployed alike, may face a problem if they do not have health
insurance while filing their tax returns. If they do not have insurance while filing, they will face a
penalty for this. It was estimated that in 2014 up to 6 million tax payers would face these
penalties even though they could have easily avoided them. These penalties may include up to 1
percent of the households income (Pear 1). In 2015 the penalty increases to $325 per person or
2 per cent of household income, and in 2016 it jumps to $695 per person or 2.5 per cent of
household income, whichever is greater. (Smith 1)
It is not just American citizens that are feeling these taxes created by Obamacare.
Canadian citizens who spend large amounts of time in the United States of America may be
liable to pay American taxes (Wilson 1). Many Canadian citizens believed they would be safe

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from these taxes as there was no way that either country could tell how long they were in the
United States, but as of June 30, 2014 the borders will begin tracking the dates that people cross
between them to log how long Canadian citizens are in America (Wilson 1). Under IRS rules, if
a Canadian person spends greater than 182 days within a calendar year, he/she risks being
considered a U.S. Person for tax purposes a status effectively the same as any U.S. Citizen or
green card holder (Wilson 1).
As you can see, lots of employees and employers may feel The Patient Protection and
Affordable Care Act may hurt them more than it is helping them. After a few years, the amount
of people who still need to pay these penalties should decrease and other forms of paying for this
act may come into play to help lower costs on businesses as it is mostly the small to medium
sized businesses that are hurting from this, while most employers who didnt previously have
insurance greatly appreciate the relief of having medical and health insurance in case of
emergencies for them or their families.

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Works Cited
Hoover, Kent. "Obamacare's Cadillac Tax Is Needed, Economists and Health Care Experts Tell
Congress - Boston Business Journal." Widgets RSS. BizJournals, 1 Oct. 2015. Web. 22
Nov. 2015.
Hoover, Kent. "Obama Signs Bill Changing Obamacare for Some Small
Businesses." BizJournals.com. BizJournals, 8 Oct. 2015. Web. 23 Nov. 2015.
Hoover, Kent. "Obamacare's Tax on Health Insurers Hitting Small Businesses
Instead." BizJournals.com. BizJournals, 3 Nov. 2015. Web. 22 Nov. 2015.
Mathew, Wilson. "MITIGATING U.S. TAX EXPOSURE THROUGH THE CLOSER
CONNECTION STATEMENT." Collinsbarrow.com. Collinsbarrow, 1 May 2014. Web.
23 Nov. 2015.
"Obamacare Bill: Full PPACA & Related Laws." Obamacare Facts. Web. 22 Nov. 2015.
Pear, Robert. "White House Seeks to Limit Health Laws Tax Troubles."The New York Times.
The New York Times, 31 Jan. 2015. Web. 23 Nov. 2015.
Smith, Shelley. "Obamacare In Canada." Collinsbarrow.com. Collinsbarrow, 27 Nov. 2014. Web.
23 Nov. 2015.
Tracer, Zachary. "Employer Health Insurance Costs Slow as Workers Pay Bigger
Share." Bloomberg.com. Bloomberg, 22 Sept. 2015. Web. 22 Nov. 2015.
Wayne, Alex. "Historic Coverage Expansion to Test Promise of Obamacare." Bloomberg.com.
Bloomberg, 30 Dec. 2013. Web. 22 Nov. 2015.

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"Obamacare Tax Filing Backlash: There Will Be Blood." Forbes. Forbes Magazine, 4 Feb. 2015.
Web. 23 Nov. 2015.