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Many employers have found the use of payroll cards to be extremely advantageous, not only to the employer, but to employees as well. Employers can save around $50.00 per employee per year, due to eliminating the need to physically provide a paycheck, reducing or eliminating bank service fees, and reducing paycheck fraud. Similarly, many employees do not have a bank account and thus no access to a direct-deposit program.

During this past summer, numerous legal issues were exposed in litigation against a McDonald's franchisee claiming that McDonald's restaurants forced employees to receive their wages through payroll debit cards. The plaintiff alleged that the cards used carried associated fees that effectively reduced employees' pay, including charges of $1.50 for ATM withdrawals, $1.00 for balance inquiries, $.75 for online bill payments, and a $10.00 per month inactivity fee if money remains on the card longer than three months. The franchisee defendant thereafter announced that it would allow employees to choose whether to be paid by debit card, direct deposit, or paper check. Later, the Consumer Financial Protection Bureau (CFPB), a federal consumer regulator, announced that employers cannot require workers to receive their paychecks on debit cards. The CFPB said that employers must provide other options as to how employees receive their wages. Holders of the payroll cards are also entitled to disclosures of any fees and access to their account history, the CFPB said.

Many employers have already responded to these issues by automatically enrolling workers in a payroll card program, but allowing them to sign up for other options, such as direct deposit.


Several trends in current as well as long-range plans are developing for private employers concerning healthcare. In terms of immediate developments, several large employers, including United Parcel Service and Delta Airlines, have announced that they will remove thousands of spouses from their healthcare coverage because they are eligible for coverage elsewhere.  Delta accompanied its August announcement with a letter to all employees explaining that complying with the new healthcare law will cost the company and its employees tens of millions of dollars a year. Other cost increases cited by Delta include a $63.00 fee per covered health plan participant charge that will start next year, and other cost requirements of expanded coverage of dependents.

r 2014, ObamaCare requires large employers to cover workers, but not dependent children. For 2015, the requirement to cover dependent children applies, but the dependent children coverage does not have to be affordable.

One of the many controversial features of ObamaCare is that it bars employees from buying subsidized coverage through the exchanges if they have the opportunity to buy affordable insurance through their own employers. Many employees would actually be better off if their employers did not offer affordable health insurance. Starting in 2014, if household income falls below 400% of the federal poverty level, which is approximately $46,000.00 for an individual, or $110,000.00 for a family of five, employees are likely to qualify for a tax credit to help pay for health coverage purchased through state exchanges. The tax credit could make individual coverage more affordable than employer-provided plans. Employers are reluctant to eliminate their plans, however, as their most skilled or highest-paid employees earn too much to qualify for tax credits in the State exchanges and employers feel they need to maintain their healthcare plans for competitive reasons. In September, Trader Joe's, the supermarket chain, announced it would end health benefits for part-time workers, instead giving employees a $500.00 payment and sending them to the State exchanges. Trader Joe's explained that with the tax credits available there, most workers would get a better deal than the company could offer.

Another development particularly for larger employers, is the use of so-called "private" insurance exchanges. Recent examples include Walgreens, Sears, Darden Restaurants, and IBM, who are planning to give employees and/or retirees vouchers to shop among competing insurance plans on private exchanges. Private exchanges are run by outside benefits companies and typically offer more choices than those offered by employers. Employers contribute a set amount and employees choose which plan they prefer. The private exchanges are, in many respects, similar to the state exchanges required under ObamaCare. According to the consulting firm Accenture, it is estimated that more than a quarter of people now covered by insurance through their employers will be getting their benefits this way within five years. An insurance company spokesperson describes the move to private exchanges as, "An irreversible trend from defined-benefit to defined-contribution employer-based health coverage." Employees would search for insurance plans on the private exchanges much like they search for airline flights on Expedia. Consumers would thus have the option of choosing lower premiums for higher deductibles and a narrower network for doctors and hospitals. According to a survey by Towers Watson, among employers of less than 1,000 workers, about four out of five intend to offer a high-deductible policy next year. Such plans may be encouraged ironically by ObamaCare's so-called "Cadillac tax," which begins in 2018, in which employers will face a 40% tax on premiums that exceed $10,200.00 for individual coverage. Raising deductibles may be the easiest way to keep premiums down to avoid the tax.

Still another approach concerns so-called "mini-med" plans, which are most common in low-wage industries such as retailing, restaurants and agriculture. Such plans offer relatively cheap coverage, with premiums around $100.00 a month, and also require smaller co-pays and deductibles. Sometimes employers even pick up the entire cost. The disadvantages are that the benefits are quite limited, so policyholders who suffer serious accidents can face big medical bills. Currently some 4 million people are enrolled in mini-med plans, which cap benefits to participants, sometimes as low as $3,000.00 per year. Some employers say such mini-med plans are good for workers, as otherwise workers simply would not sign up due to the high cost.


Other negative public relations issues for Obamacare emerged at the end of October, when as many as 10 million American consumers are expected to have their individual healthcare plans terminated by their insurers effective on or around the first of next year. Currently, about 15 million people are covered under individual healthcare plans without regard to their employment. Many insurers have cancelled the existing healthcare plans either because they did not meet ObamaCare requirements, or out of concern the plans would be uneconomical due to changing participation. While the cancellations should have been expected, they came as a surprise to many who felt they had been promised by the Administration that they could keep their existing healthcare plans if they so decided. While consumers with cancelled individual plans purchase other coverage, many report that the available coverage is much more expensive, particularly since, due to ObamaCare, the healthcare plans have been required to cover additional benefits, many of which consumers would have chosen to do without because of the additional expense involved. Further, because the new health law changes require that sicker people not be required to pay more, those in good health are likely to be required to pay more because of the common pricing. Even House Democratic Whip Steny Hoyer told reporters that the President should have been "more precise" when he said that if Americans liked their existing health insurance, they could keep it.

As recently as November 13, White House aides from Capitol Hill warned Congressional representatives that it would be a mistake to reinstate policies that do not meet minimum standards set by the healthcare law. The very next day, the Administration announced that insurers can extend by one year those policies they had canceled for failing to meet the law's requirements. The turnaround resulted largely from opposition of the Democratic Party, particularly those seeking re-election during 2014, as to the backlash created by cancelling of millions of individual policies. Many believe that the President broke a campaign promise that everyone could keep their existing healthcare plans if they like them, or at least his failure to warn of the situation. The Administration's reversal on November 13 and 14 was to head off a vote in the U.S. House of Representatives on November 15.

On November 15, the House of Representatives voted by a large majority to change portions of ObamaCare and permit the sale of individual health coverage that falls short of requirements in the law. Some 39 Democrats joined Republicans in supporting the measure in the House, and the final vote was 261-157. The bill passed by the House of Representatives goes beyond the administrative approach suggested by the Administration, because it would allow insurance firms to sell individual plans to new as well as existing customers, even if the coverage falls short of the new law's requirements.

The White House responded by accusing Republicans as seeking to "sabotage the healthcare law." It is unclear whether the Senate will approve a bill similar to the House, but the Democrats in the Senate are also under great pressure from the public.

Republicans in the House cite the fact that fewer than 27,000 signups have been completed on the federal healthcare site, while millions of individual policies have been canceled due to the new law. The combination of fewer signups under the new law than anticipated, and the possible extension allowing individual policies not meeting the law's requirements to continue, would exacerbate the problem of having healthier consumers stay out of the state exchanges, and create a pool in the state exchanges of the relatively unhealthy insureds, and increase overall costs of exchange-based plans.

There are numerous other issues as to whether state insurance commissions will approve all the changes, and whether the insurance carriers have the time or the inclination to reinstate some of the cancelled plans. There are further questions as to whether some of the changes promoted by the Administration can be made by regulations, or only by changes in the law itself. The impact politically of the developments are so severe that public opinion has shifted some 11% towards Republicans from the adverse public reaction to the government shutdown to the problems created by the implementation of ObamaCare.


The Administration announced in October that it was postponing for individuals their obligations to sign up for healthcare without penalties for about six weeks. On October 23, the Administration announced that if consumers sign up for mandated healthcare coverage by the end of March, they will not face the $95.00 (or 1% of income) individual penalty. A White House official denied that pushing back the sign-up requirement was related to the problems with healthcare.gov, and explained it as an effort to eliminate a "disconnect" over the deadline for individual coverage.

The current situation has generated somewhat of a backlash in the President's own political party. While the recent government shutdown triggered an Administration position that ObamaCare would not be postponed under any circumstances, immediately thereafter the Administration announced its own postponement, and a number of prominent members of the President's own political party have proposed further postponements. CNN reports that all sixteen Senate Democrats up for re-election are expected to support a proposal from Democratic New Hampshire Senator Jeanne Shaheen to both extend the ObamaCare enrollment deadline and waive tax penalties for those unable to enroll. Republicans have been proposing for some time a delay of the individual penalties, much like the employer penalties were delayed one year, to calendar year 2015.

Meanwhile, fingers continue to be pointed between the Administration and various contractors, as to who is responsible for the numerous glitches on the healthcare exchange website. The Department of Health and Human Services (HHS), which is running all or part of the exchanges in 36 states, has repeatedly declined to answer questions about its handling of the rollout, including specific glitches, enrollment figures, or its plans to fix the problems.  Supposedly only about 25% of those attempting to register have been successful, and there have been massive errors in the enrollment data recorded, reportedly requiring insurers to go to a manual process to complete the enrollment properly.  HHS has pressured insurers to refrain from commenting publicly about the problems.

These issues not only affect adversely the reputation of ObamaCare, but also discourage younger and healthy consumers from enrolling, which means that unhealthy persons will enroll and will increase the cost of programs on the State exchanges.

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