So rebates are now in the mail. I hope that everyone enjoys them and puts the money away so they can afford the higher premiums that are coming with implementation of Obamacare. The average rebate is $47 for the year. That equates to $4 per month or about 13 cents a day. When looking at the cost to actually determine the amount of rebate, this seems like a waste of money. Now the fun comes for employers to determine how much needs to be refunded to each employee. I am pretty sure that the cost of having their accountant figure the proper amounts will be more than the total amount of the rebate. Can you say futility? Imagine a small business with 12 employees and significant turnover. They are supposed to find each person, refund the proper amount, and explain how the amount was determined. Of course the other approach is to use the rebate to offset future premiums for employees. So let’s look at that option. I will use an employer with 12 employees who currently pays $150 dollars per month for each employee’s health insurance. The employer finds that his rebate equals about $48 dollars. The employer needs to determine what part of the rebate belongs to the employee. Just for the sake of my example, let’s say that somehow it is determined that employee was paying one third of the premium. So in this example, the employer needs to use $16 dollars to “rebate” the employee. Our employer decides to use this $16 dollars to offset future premiums. This means that each employee’s premium for the next year is reduced by $1.25 each month. Now, because of all the work the employer has had to do to make sure that the rebate has been properly divided; the employer increases the employee’s share of the premium to include an additional $2.00 per month. Net for the employee is an increase of 75 cents for health insurance. I know this is simplistic but it illustrates the stupidity of rebates being directed to third party payers. Since employers today pay a majority of the cost of insurance for employees, it makes no sense to ask them to refund dollars to their employees. If they wanted to allow the employee to pay less, they would have been charging less of the employee from the beginning. The only exception would be an employer who made their employee pay 100% of the premiums which is not allowed in the marketplace already.
So my question to everyone is, when will the “rebate police” start putting business owners in jail for not abiding by the intent of the rules? Since an employer is not required to provide group insurance, nor is the amount they have to contribute policed by rule of law, how can the rebate be assured of reaching employees. Since it was the intent of some that this rebate be used to “buy” votes in November, how are they going to punish businesses that use the money to offset future premiums? My understanding is that these rebates were to be released by August 1st by the carriers and then paid out to employees within 90 days. Hmmm, let me see. August, September, October, that makes up 90 days or so. That means the checks are supposed to be in recipient’s hands by the first of November. Wow, just before the election. Isn’t that interesting?
Benjamin Franklin wrote “When the people find they can vote themselves money, that will herald the end of the Republic.”