Thursday, 8 December 2011
Employers Could Benefit By Canceling Employee Health Coverage
With the new health exchange programs coming into play, it’s possible that some employers will stop providing group health plans for their workers. This would see them heading to these new health insurance marketplaces to receive subsidized health coverage. The employers would face fines for discontinuing health insurance, but the fines would be cheaper than continuing to pay for their workers’ health benefits.
According to an article by the Washington Post, if this scenario was to take place, it would cost employees who are in a group plan now to move over to a subsidized program. For the employer, if they stopped offering health insurance to their employees it’s estimated that their health care costs would drop by more than 40 per cent.
If you’re wondering why this wouldn’t mean the costs would drop totally by 100 per cent, you have to remember that the employers would still have costs because they would be fined financially for dropping the health coverage. They could conceivably stop offering health insurance, pay the fines and save quite a bit of money while doing so.
However, things don’t look so rosy for those workers who would suddenly find themselves without health coverage. At the moment, employers are paying a sizable chunk of employees’ insurance costs. In fact, they’re paying a lot more of it than the federal government will be with the new subsidized method.
It’s estimated that the average worker who goes to a health exchange for coverage would see their current rates increase between 79 and 125 per cent. It’s hard to predict exactly because the amount of subsidies received by the government will depend on a person’s income. People who earn more money will be eligible for smaller subsidies while those who make less will receive more in subsidies.
The possibilities are something to think about. Perhaps the way to stop this from happening is to increase the fines to employers if they stop offering health insurance. That way there would be nothing to gain by doing so.
