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POLITICS: PennAve

Obamacare, immigration reform may make immigrants cheaper to hire than citizens

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Would it be cheaper for U.S. companies to hire newly legalized immigrants instead of Americans, as immigration-reform legislation pending in Congress would allow? This being Washington, the answer is both "yes" and "not exactly."

Two months after the Senate approved a comprehensive overhaul of the U.S. immigration system, confusion reigns over whether the reforms -- combined with changes wrought by Obamacare -- give immigrants an edge over U.S. citizens in the job market. It's a potential political landmine for immigration-reform supporters, though congressional policy aides and a Congressional Research Service report obtained by the Washington Examiner suggest that the problem may not be as great as many fear.

If Congress approves a Senate bill that creates a pathway to citizenship for illegal immigrants, those immigrants would be granted legal status as "Registered Provisional Immigrants." They would be legal but barred from collecting health care benefits available under Obamacare. And because the Affordable Care Act also requires businesses with more than 50 employees to provide health benefits at a capped price, it could be cheaper for those companies to hire newly legalized immigrants rather than citizens who are eligible for Obamacare benefits.

But that is not true in all cases. Following are a couple of scenarios for how it could play out.

•The newly legalized immigrants aren't eligible for health care benefits, but the companies that hire them would be required to count all immigrants as full-time employees. That could push some companies' payroll rosters beyond 50 workers, requiring them to provide health benefits to workers, a mandate from which they are now exempt.

Under this scenario, hiring a newly legalized immigrant would cost an employer about the same as hiring a U.S. citizen.

•In addition to requiring companies with more than 50 full-time workers to provide health benefits, Obamacare forbids employers from charging workers more than 9.5 percent of their salary for those benefits. A company that charges more than that would have to pay a per-employee penalty. But because newly legalized immigrants aren't eligible for Obamacare benefits, they wouldn't be counted when the fine is calculated, reducing the employer's penalty or giving them great incentive to charge more. Those factors could make it cheaper to hire an immigrant over a citizen.

The prospects for comprehensive immigration reform clearing Congress this year remain unclear. But any package that includes a path to citizenship for illegal immigrants will almost assuredly prohibit newly legalized immigrations from collecting Obamacare benefits. Any bill that doesn't include a prohibition on health benefits would likely not attract enough Republican support to pass.

Ironically, that could potentially create a unique class of U.S. residents -- the only one in which members are exempt from Obamacare's individual mandate. They would be the only ones who don't have to purchase health insurance.

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Author:

David M. Drucker

Senior Congressional Correspondent
The Washington Examiner