February 18, 2011

PPACA Creates New Form of Wage Discrimination

  The folks over at Employer Benefit News describe a hopefully unintended pitfall to the new PPACA legislation starting in 2014.  Every day more and more details regarding the Patient Protection and Affordable Care Act come to light, some good and some bad.  This is one of the bad ones.  To summarize, employers who choose to continue offering health benefits, rather than dropping out entirely and paying the penalties for doing so, must charge no more than 8% of the household income of their employees.  This creates a strong financial incentive to hire those prospective employees who come from dual income households, thereby allowing the spouse's income to factor in to that 8% figure.  Prospective employees who would be the sole breadwinner for the household will end up costing the employer significantly more for their portion of health care costs, no doubt leading to a new form of income discrimination.

PPACA and its authors clearly have this wrong.  One's position on PPACA and government-led health care reform aside, it is clear that the very people this bill was meant to protect are those who are going to suffer most in these cases.