Wednesday, October 17, 2012

Under the ObamaTax Hood

Behemoth tax and accounting firm Ernst & Young has put out a comprehensive study of exactly how the new ObamaTax fees penalties taxes will impact business (and anyone employed by a business). And it ain't pretty:
"[T]he employer community has reacted with concern to ...  the [ObamaTax's] Medicaid provisions, allowing states to decide whether to comply with the Medicaid expansion provisions without risk of losing existing federal funding ... In states that do not expand Medicaid, employers could face greater exposure to taxes for lower-wage employees who otherwise would have been eligible for Medicaid and may now be entitled to tax credits for Exchange coverage if their employer coverage is not affordable."

But it gets worse: new definitions of "large" versus "small" employers, seasonal versus part time or temporary employees, the employer mandate. All of these create uncertainty and, of course, higher costs of doing business (hiring and training HR personnel or conmsultants, increased tax planning, the list goes on).

But wait, it gets still worse:
"The law states that a plan shall not meet the minimum value determination if “the plan’s share of the total allowed costs of benefits provided under that plan is less than 60% of such costs.” How minimum value is determined will have a tremendous impact on the affordability and administration of employee benefit plans and is intricately intertwined with the other employer provisions."
Follow that?

Don't feel bad, it's going to be a bonanza for the CPA's and JD's.

Oh, one last bit:
"Even among employers who for decades have voluntarily offered health benefits to their employees, a driving force in [ObamaTax] compliance efforts is the avoidance of unanticipated tax liabilities and controlling administrative costs. As such, employers must take a holistic view ... to assess and valuate their risk for increased tax liabilities under the law."
Shorter version: bye bye group health plans.

Told ya so.

Oh! Those who wish to "read the whole thing" can download it here.

[Hat Tip: FoIB Jeff M]

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