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Bill Gives New Legal Immigrants Hiring Edge

Under the immigration reform bill, some employers would have an incentive of up to $3,000 per year to hire a newly legalized immigrant over a U.S. citizen.

In avoiding one controversy — the cost of providing millions of newly legalized immigrants with ObamaCare subsidies — the Senate "Gang of Eight" may have risked walking into another.

The bipartisan legislation released Wednesday dictates that those granted provisional legal immigrant status would be treated the same as those "not lawfully present" are treated under the 2010 health law.

That means they would neither be eligible for ObamaCare tax credits nor required to pay an individual tax penalty for failing to obtain qualifying health coverage. It also means some employers would face no penalty for failing to provide such workers affordable health coverage.

For employers who don't offer insurance, fines are based on full-time equivalent staffing levels, so distinctions between citizens and visa holders don't matter.

The Cost Of Citizenship

But employers who do offer insurance also can face fines. If the coverage costs a worker more than 9.5% of pay, it is deemed unaffordable and the worker becomes eligible for ObamaCare's exchange subsidies.

These employers would have to pay the government up to $3,000 per full-time worker who receives ObamaCare subsidies.

Some employers have said they would seek to limit ObamaCare fines by shifting some workers to part-time, which the law defines as fewer than 30 hours.

The immigration bill, as written, would provide another path for avoiding fines by hiring of legalized immigrants as full-time employees, since they wouldn't be eligible for ObamaCare for a decade or more.

Millions of immigrants given provisional legal status would be eligible for permanent residence after 10 years under the bill.

A playing field tilted toward legalized immigrants is surely not what the bipartisan group of Senators intended, and it may be possible to craft a legislative fix. But it may not be simple, either politically or administratively.

Double Or Nothing

Congress could weaken the ObamaCare employer mandate, which might not please Democrats. As an alternative, they could make it even more punitive, a tough pill to swallow for Republicans who would like to scrap the mandate altogether.

One possibility, for example, would be to further penalize companies based on the number of full-time provisional immigrants on their payroll without qualifying coverage.

ObamaCare's design has been unusual among means-tested programs in that benefits — and penalties — apply to all legal residents who earn up to 400% of the poverty level and don't have employer coverage. Other programs aren't accessible for five years after gaining legal status.

ObamaCare's exception for the undocumented only made sense because their status was in flux, politically, and it has been illegal for employers to knowingly hire them. But with no legal barrier to employment, favored status under ObamaCare's employer mandate looks problematic.