The benefit of Employer-Sponsored Health Insurance. Or is it a benefit?

Confused? You are not alone.

Confused? You are not alone.

It is common business practice to offer an employer group health plan so potential employees can receive the benefit of health insurance. Some say that it helps with retention of their employees.  We understand this business practice, however, we want to make sure we don’t lose sight of the big picture. Health care has been reformed, and there are many options that were not available to business owners just a few years ago.

The launch of the Affordable Care Act (ACA, ObamaCare, whatever you want to call it) and the Health Insurance Marketplace opens up new opportunities to lower costs for small employers and employees. The ACA employer responsibility provision takes effect starting in 2015, and requires large employers, those with more than 50 Full-time equivalent employees (greater than 100 FTE in 2015 only), to provide health insurance to its full-time employees or face a penalty. Employers with fewer than 50 FTEs will not face a penalty if they do not offer their employees a group health plan. (most of our businesses here in our great state of Iowa.)

The Marketplace is a health insurance exchange where individuals can compare and shop for commercial health plans and potentially qualify for subsidies to help pay for premiums and medical care, regardless of their health status. An offer of coverage through an employer makes employees ineligible for premium tax credits through the Marketplace (there are a few exceptions I would be happy to discuss with you, but not in this write up). Conversely, if an employer does not offer a group health plan the employee may qualify for subsidies through the Marketplace (subsidies available only through the Federal Health Insurance Marketplace). Employees may also choose to enroll in a plan that is outside the Marketplace without federal subsidies.

So, I have heard people say, “Well, subsidies are there for the poor.” In my opinion, an individual in the state of Iowa making under roughly $46,680 a year is not exactly poor. This means if you have a husband and a wife with two kids, they qualify for subsidies if their combined income is under $95,400. Umm, I don’t think that is exactly roughing it. Most people do qualify to receive subsidies and don’t even realize it.

Another thing to think about, offering an employer sponsored plan locks employees into a few options. On the Marketplace, your healthy 27 year-old can pick a high deductible plan, possibly get subsidies to offset the cost and be in compliance to avoid the penalty.  That 27 year old is not locked into an employer offered plan that is entirely too much coverage than they want, and they have to pay for it. Your 54 year-old employee with a heart condition can choose a plan with a lower deductible, a network with the doctors they want and pay more in premiums to get what they want. The bottom line, your 27 year-old and 54 year-old get to make that choice. There is the third option, too. They can go uninsured if they don’t mind paying the penalties come tax time. Let it be their decision. You are essentially giving them their freedom back.  

I am not saying that employers should go out and drop their group coverage immediately. It is definitely not the right decision for everyone.  I am simply saying people need to get educated on their options and realize there are options out there. Employers that are trying to do a ‘good thing’ for employees might be hurting themselves and the employees.

These small and medium size employers that are just trying to keep their lights on have options to potentially save money.

Once people start to realize this, weigh their options and understand a little more of the inner workings of what is going on with the Affordable Care Act (actually two pieces of legislation for the nerds of my world  – the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) I hope employers realize that they can recruit and retain on other benefits that are meaningful like WELL-THOUGHT-OUT wellness programs that actually improve the health of the employees and have a direct impact on the out-of-pocket costs of those valuable employees. I don’t think the employer would mind having less sick (more productive) employees either. What a concept.

If you want to chat more about this with me, please do.  In my most humble opinion, I know more than I ever expected to about this ObamaCare stuff working for Focus ACA.

Happy Friday. Cheers – Kristina Carson

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