Tuesday, January 6, 2015

Some basic math on the Affordable Care Act

How were you at math word problems in school? This one ought to be easy enough.

A school district has 1,000 full-time employees and spends $4,800 a year on each of them for group health insurance. If the school district doesn’t pay for this insurance, it faces an annual fine of $3,000 per employee. How much can the school district save each year by dropping its group health insurance?
Brian McKellar
The answer is $1,800 per employee. Multiply that by 1,000 and you have $1.8 million in savings.

Idaho School districts are some of the largest employers in the state, yet Idaho pays schoolteachers some of the lowest salaries in the nation, starting at $31,248.00 and capping at $57,782 after 25 years of service. Although it’s exciting that there is a plan to raise teachers’ base salary to $40,000 over the next five years, according to a study done in 2013 a family of four in Bonneville Country requires $54,939 to “get by.”

Unless both parents work, Idaho teachers still have to struggle to make ends meet. In fact, I personally don’t know any teacher whose spouse also doesn’t work.

Wouldn’t it be great if somehow we could put some extra cash in their wallets?

The Affordable Care Act stipulates that any company with more than 100 employees is required to offer health insurance. If it doesn’t, it faces a maximum penalty of $3,000 per employee. But based on the clients who have approached us, school districts are paying much more than that simply to cover their employees. Incredible as it sounds, by dropping group health coverage, even with the $3,000 maximum penalty figured in, some school districts could easily save more than a million dollars and give every teacher a raise.

This doesn’t even address coverage for families. Many school districts contribute $0 towards family health insurance, and some teachers are paying more than $600 a month on their school group plans.

The ACA has made it easier than ever for people to qualify for inexpensive health coverage. A family of four in Bonneville County earning $54,939 (the “get by” number from above) would qualify for a $380 monthly tax credit, making the price of the second lowest silver-level exchange plan $336.82 a month.

Do the math. Show your work. Class dismissed.

Brian McKellar is an independent agent with McKellar Insurance and a member of the Square One business development group.

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