Is the Solution Built into the Problem?

Keep the Insurance Monster from eating your Income

Healthcare reform, or as it is commonly known, Obamacare, is not health insurance reform. 

In reality the Affordable Health Care Act is health insurance access reform.  

Contrary to claims made by the Obama administration, instead of mandating more employers offer insurance, the ACA may be walking employers down the path to dropping their group health insurance plans.

Starting next year many employers that currently offer health insurance may no longer do so, ironically undermining one of the very goals of Obamacare.  Astute employers should start scrutinizing whether their health insurance coverage is really worth the enormous costs and administrative hassles, as Obamacare offers their employees an alternative means of accessing health care coverage.

Why does it make good business sense for employers to drop their corporate sponsored health insurance benefits coverage? 

First, HIPPA Privacy laws apply to employees and employers at work and are routinely violated by well intentioned employees and plan administrators; the employer can be fined or sued for such a violation. 

Second, if an employer is paying out several hundred thousand dollars per year into benefits plans, only to be hassled by complaining employees and frustrated by endless plan administration paperwork and Department of Labor Compliance issues, opting out may be a great option. 

Under the Affordable Health Care Act, everyone will be allowed, nay mandated, to have coverage or pay a fine.  In the United States today, there are between 5.5 and 6 million employers with less than 100 employees.  Under Obamacare, if you have less than 50 employees, you are under no obligation to offer health insurance. Nor do these employers face a fine or penalty tax if they choose not to offer health insurance.

Employers with fewer than 100 employees may find that paying the fine costs less than offering health insurance. 

The Health Insurance Exchange is a mechanism that pools all the health care providers into one shopping center and offers many subsidies if they buy a health insurance plan.  Consumers choose the providers they want based on which provides the coverage that best suits their needs.  The exchange pools are meant to be competitive in order to drive the quality up and cost down.  For many employers, this might just be a better choice for their employees.  Even though this will leave the employees looking for insurance coverage in a currently ill-defined shopping center filled with unfamiliar health insurance options, dropping your group health insurance plan just might be good business sense!

I recently met with the president of a company with 110 employees on benefits.  Based on our complicated “fine or penalty” calculations (not a straight $2,000 per employee as many think) he figured that the fines would be about $150,000.  Right now, the plans are costing him $400,000 and the employees are always complaining about what is and what is not covered.  He is seriously considering dropping his company’s health care plan, paying the fine and just giving the money he normally contributes as the employer’s share of the premiums to his employees.   This might be the best answer for all involved, as an informed employee might find a better deal in the Health Insurance Exchange on the specific insurance coverage that best suits his or her needs. 

As an insurance broker, it is my job to find answers to insurance problems.  Employers and mid size companies need to start analyzing their insurance purchases like they would any other large dollar purchase.  While there are many reasons why an employer might like to get out of the health insurance business, an obvious reason to continue offering health insurance is to provide an incentive benefit to retain top talent.  However, if the cost is too much, the answer might just be Obamacare. 

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Katherine Woodfield, MBA

Katherine Woodfield, MBA
Author, Broker, 20 year veteran of the Health Care Industry and Author of “Don’t Buy THAT Health Insurance: Become an Educated Health Care Consumer

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