Archive | Employers Reaction to Bill

One in 10 employers plans to drop health benefits, study finds

About one in 10 employers plans to end workers’ health insurance as the new healthcare law takes effect, according to a new study. The finding could bolster opponents of the law, who argue that its changes to the healthcare system will force workers out of insurance plans they like. Supporters of the law say most people will keep their current coverage.

Surveying 560 U.S. companies, consulting firm Deloitte found that 9 percent of employers are planning to drop employee health benefits within three years. Eighty-one percent said they would continue covering employees, and 10 percent said they were not sure. The study was conducted between February and April, before the Supreme Court ruled to uphold most of the healthcare law. Deloitte said it does not believe the decision would change companies’ responses.

The law includes a provision requiring people to carry health insurance or pay a fine, and seeks to make it easier for Americans to find and afford coverage outside of their employers.

  • The study found that smaller firms were most likely to say they will drop coverage. Thirteen percent of companies with 50 to 100 workers said they would end policies within three years, compared with 2 percent of companies with more than 1,000 workers. The businesses surveyed were not identified.

A spokeswoman for the Department of Health and Human Services said the Massachusetts law that inspired the federal healthcare overhaul led to an increase in the number of people insured through their employers. “This law will decrease costs, strengthen our businesses and make it easier for employers to provide coverage to their workers,” Erin Shields Britt told The Wall Street Journal.

Several other estimates have predicted that fewer people will receive healthcare through their employers after the healthcare law takes effect. In March, for example, congressional auditors pegged the figure at 3 and 5 million people each year from 2019 to 2022. The Congressional Budget Office added that most employers “will continue to have an economic incentive to offer health insurance to their employees.

* Modified from The article


Counties Worried About Doctor Count Ahead of Medi-Cal Growth

County officials are concerned by a shortage of physicians in the state as California prepares for a Medi-Cal expansion under the federal health reform law, the Ventura County Star reports.

  • Background

Under the reform law, states have the option of expanding Medicaid coverage to individuals with incomes of up to 133% of the poverty level; this is in excess of $92,000 for a family of four.

The law’s Medicaid expansion provision also will expand coverage to low-income adults who have no children. Following the U.S. Supreme Court ruling upholding the reform law, California officials said the state would move forward with implementing its provisions. Forty-seven California counties are participating in the “Bridge to Reform” program, which aims to implement the Medicaid expansion ahead of schedule.

Inland communities — which are facing a shortage of primary care physicians — will have more residents receiving Medi-Cal coverage under the expansion than wealthier coastal communities. The state has an uneven distribution of physicians. For example, Riverside and San Bernardino counties have only one medical school and struggle to attract and retain physicians, while some counties in the northern part of the state have an abundance of doctors.

Meanwhile, a report by the California HealthCare Foundation’s Center for Health Reporting found that nearly half of primary care physicians in the state are not willing to see new Medi-Cal beneficiaries because they say Medi-Cal reimbursement is too low. California also has a large number of physicians who are nearing retirement age, which could affect the number of physicians who treat Medi-Cal beneficiaries.

  • Concerns

Mary Carr, executive director of the Ventura County Medical Association, said that mandates in the reform law and resulting health care trends — such as accountable care organizations, electronic health records and lower physician reimbursement — could result in fewer physicians available to treat newly insured patients. She said the changes “may cause physicians to choose early retirement.”

  • Seeking Solutions

Lee Kemper — executive director of the County Medical Services Program, a consortium of 34 rural counties implementing the Medi-Cal expansion — said Medi-Cal reimbursement rates must be increased in rural areas to attract more doctors. In addition, Senate Health Committee Chair Ed Hernandez (D-West Covina) plans to draft legislation that would expand scope-of-practice definitions for certain health care providers — such as nurse practitioners and physician assistants — to help bolster the state’s health care workforce. In addition, Hernandez said he will try to increase the number of medical students in the state and push for medical residency programs in underserved areas.

*Modified from the Ventura County Star



Employer Mandate – What Happens If a Company Does NOT Offer Health Insurance

The Health Care Reform bill requires certain employers to offer health insurance, else pay a tax penalty: Effective January 1st, 2014, “applicable large employers” will be required to offer “minimum essential coverage” that is “affordable” to their employees. “Applicable large employers” who fail to offer “minimum essential coverage” that is “affordable” will be required to pay a “penalty” on their tax return. obamacare approved

1) Who are “applicable large employers”?
2) What qualifies as “minimum essential coverage”?
3) What is the penalty if I do not offer “minimum essential coverage”?
4) What is the penalty if I do offer “minimum essential coverage”, but it is not “affordable” for some of my employees?

1) Who are “applicable large employers”?

A company is defined as an applicable large employer on a calendar year basis. For example, a company could be an applicable large employer in 2015, but not in 2014. If the company employed 50 or more full-time employees on average during the preceding calendar year, they are an applicable large employer for the current calendar year.

A company is NOT an applicable large employer if the company:

  •     employed less than 50 full-time employees on average during the previous calendar year, or
  •    employed more than 50 full-time employees no more than 120 days during the previous calendar year due to a seasonal workforce.

Calculating the number of full-time employees.

Generally, a full-time employee is an employee who is employed on average at least 30 hours of service per week in a given month. However, for purposes of determining whether a company is an applicable employer, the company must include all full-time employees plus the full-time equivalent of its part-time employees.

To calculate the full-time equivalent of part-time employees, a company should add the number of hours worked by part-time employees and divide the total by 120.

The sum of the full-time employees and the full-time equivalent of the part-time employees is the number used to determine whether a company is an applicable large employer.

  • Simple translation: If you have less than 50 employees, you are not an applicable large employer. If you have 50 or more employees, you probably are an applicable large employer.

2) What qualifies as “minimum essential coverage”?

Minimum essential coverage is the minimum amount of health insurance coverage an applicable large employer must make available to avoid paying the maximum penalty (see #3, below).

In order to avoid paying the maximum penalty, the employer must offer each employee the ability to enroll in minimum essential coverage through an eligible employer-sponsored plan, which is: any plan or coverage offered in the small or large group market within a State (including small business exchanges),
coverage under a grandfathered health plan, or a qualified governmental plan.

3) What is the penalty if I do not offer “minimum essential coverage”?

An applicable large employer who does not offer minimum essential coverage may not have to pay a penalty.

The employer only pays a penalty if at least one employee enrolls in a health insurance exchange and also qualifies for premium subsidies and/or other tax credits from the federal government.

  • If at least one employee receives federal subsidies due to purchase of health insurance through an exchange in a given month, the employer must pay a monthly penalty based on the number of full-time employees employed during that month.

IMPORTANT: When calculating the amount of the penalty, the employer receives a credit of 30 full-time employees. (For example, a company with 50 full-time employees only has to consider 20 employees for purposes of the penalty).

The annual per employee penalty is $2,000.

To get the monthly per employee penalty, you simply divide the annual penalty by 12.

To calculate the total monthly penalty, you multiply the # of full-time employees employed during the month minus 30 by the monthly per employee penalty.


In February, ABC Manufacturing employs 60 full-time employees and does not offer minimum essential coverage. In February, at least one employee purchases health insurance through the exchange and receives premium subsidies from the federal government.

The annual per employee penalty is $2,000.

The monthly per employee penalty is $2,000*(1/12).

For purposes of this calculation, we only need to consider 30 full-time employee due to the 30-employee credit.

The total monthly penalty is equal to 30*2,000*(1/12) which is $5,000.

4) What is the penalty if I do offer “minimum essential coverage”, but it is not “affordable” for some of my employees?

An applicable large employer that offers minimum essential coverage to its full-time employees may still be required to pay a penalty if the coverage is not “affordable” for one or more employees.

An employer’s coverage is considered unaffordable for any full-time employees who, in a given month, enrolls in a health plan offered through an Exchange and are eligible to receive federal premium subsidies (or cost-sharing subsidies).  (Note added 07/15/2010:  An employee is only eligible for premium subsidies through the exchange if their required contributions for their employer’s plan is greater than 9.5%)

If one or more full-time employees receive federal subsidies due to purchase of health insurance through an exchange in a given month, the employer must pay a monthly penalty based on the number of full-time employees who receive federal subsidies.

The annual per employee penalty for not offering affordable coverage is $3,000.

To get the monthly per employee penalty, you simply divide the annual penalty by 12.

To calculate the total monthly penalty, you multiply the # of full-time employees who receive premium subsidies (or cost-sharing subsidies) by the monthly per employee penalty.

The penalty is capped at a maximum of $2,000 per full-time employee per year.


In February, ABC Manufacturing employs 60 full-time employees and does offer minimum essential coverage. In February, three (3) employee purchase health insurance through an exchange and receive premium subsidies from the federal government. Thus, the coverage is unaffordable for three (3) employees for the month of February.

The annual per employee penalty is $3,000.

The monthly per employee penalty is $3,000*(1/12).

For purposes of this calculation, we only need to consider the 3 full-time employee who are receiving federal subsidies.

The total monthly penalty is equal to 3*3,000*(1/12) which is $750.

*Modified from a Zane Benefits article




Individual Mandate – What Happens if You Don’t Buy Health Insurance

The Health Care Reform bill requires certain individuals to purchase health insurance, else pay a tax penalty:

Effective January 1st, 2014, “applicable individuals” will be required to maintain “minimum essential coverage” for themselves and their dependents.  “Applicable individuals” who fail to maintain “minimum essential coverage” will be required to pay a “penalty” on their tax return.individual mandate

1) Who are “applicable individuals”?

2) What is minimum essential coverage”?

3) How much is the “penalty”?

  • Who are “applicable individuals” for the Individual Mandate?

A person is defined as an applicable individual on a monthly basis.  For example, you could be an applicable individual in January, but not in February.  A person is an applicable individual, unless one of the following circumstances apply: the person has been approved for a religious exemption under Section 1311(d)(4)(H) of the Patient Protection and Affordable Care Act (PPACA) the person is a member of a health care sharing ministry the person is not a citizen or national of the United States or an alien lawfully present in the United States the person is incarcerated without any pending disposition of charges

Simple translation: A U.S. citizen is an applicable individual unless he or she is religiously exempt, a member of a health care sharing ministry or in jail.

  • What is “minimum essential coverage” for the Individual Mandate?

Minimum essential coverage is the minimum amount of health insurance coverage an applicable individual must purchase to avoid paying the penalty.

The following plans qualify as minimum essential coverage:

Coverage under government sponsored programs (e.g. Medicare and Medicaid)

Coverage under an employer-sponsored group health plan offered in the small or large group market within a State

Coverage under a plan offered in the individual market within a State

Coverage under a grandfathered health plan

Coverage under a State risk pool as recognized by the Secretary of Health and Human Services (HHS)

The following plans do not qualify as minimum essential coverage:

Coverage only for accident, or disability income insurance, or any combination thereof

Limited scope dental or vision benefits

Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof

Coverage for on-site medical clinics

Coverage only for a specified disease or illness

Hospital indemnity or other fixed indemnity insurance

Other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits

Simple translation: “If you have individual health insurance, employer-sponsored group health insurance, or if you participate in a State risk pool, Medicare or Medicaid, then you have minimum essential coverage.

  • How much is the “penalty” for the Individual Mandate?

If an applicable individual does not maintain minimum essential coverage for 1 or more months during a tax year, then they must pay a penalty.

  • The size of the penalty is phased-in over three years:

In 2014, the penalty will be $95 per person up to a maximum of three times that amount for a family ($285)* or 1% of household income if greater

In 2015, the penalty will be $325 per person up to a maximum of three times that amount for a family ($975)* or 2% of household income if greater

In 2016, the penalty will be $695 per person per year up to a maximum of three times that amount for a family ($2,085)* or 2.5% of household income if greater

*Note: If you claim dependents, you are responsible for making sure they have minimum essential coverage.

Each year, the penalty is capped at an amount equal to the national average premium for bronze level health plans offered through state exchanges.

An applicable individual can be exempted from the penalty calculation for a month if during the month:

The individual has income below the filing threshold determined by the Secretary of the HHS.

The individual’s cost to purchase health insurance exceeds 8% of gross income

The individual is a member of an Indian tribe.

The secretary of HHS determines the individual qualifies for a hardship that made him/her incapable of obtaining health insurance.

Simple translation: The amount of the penalty depends on a number of factors including your income, the size of your household and your access to affordable health insurance.

  • In most cases, it will make most economic sense to purchase health insurance vs. paying the penalty.

Modified from a Zane Benefits Article



If ObamaCare survives, legal battle has just begun

Even if the Affordable Care Act survives its first Supreme Court test— a ruling is due Thursday — the lawsuits won’t end. Citizens have already filed challenges to what critics call the law’s “death panel” and its impact on privacy rights, religious liberty and physician-owned hospitals. Still another potential lawsuit poses as great a threat to the law as the case now before the high court.

Under the guise of implementing the law, the Internal Revenue Service has announced it will impose a tax of up to $3,000 per worker on employers whom Congress has not authorized a tax. To make things more interesting: If the IRS doesn’t impose that unauthorized tax, the whole law could collapse. The Act’s “employer mandate” taxes employers up to $3,000 per employee if they fail to offer required health benefits. But that tax kicks in only if their employees receive tax credits or subsidies to purchase a health plan through a state-run insurance “exchange.”

This 2,000-page law is complex. But in one respect the statute is clear: Credits are available only in states that create an exchange themselves. The federal government might create exchanges in states that decline, but it cannot offer credits through its own exchanges. And where there can be no credits, there is nothing to trigger that $3,000 tax.

  • States are so reluctant to create exchanges that Secretary of Health and Human Services Kathleen Sebelius estimates she might have to operate them for 15 to 30 states. Even if she manages that feat, the law will still collapse without the employer mandate and tax credits.

Unauthorized Tax

To prevent that from happening, on May 18 the IRS finalized a rule making credits available through federal exchanges, contrary to the express language of the statute.

Because those credits trigger penalties against employers, the IRS is literally taxing employers and spending billions without congressional authorization. Estimates by the Urban Institute indicate that had this rule been in effect in 2011, it would have cost at least $14.3 billion for HHS to run exchanges for 30 states. About 75% of that is new federal spending; the remainder is forgone tax revenue.

The IRS doesn’t have a leg to stand on here. It has not cited any express statutory authority for its decision, because there is none. The language limiting tax credits to state-established exchanges is clear and consistent with the rest of the statute. The law’s chief sponsor, Senate Finance Committee chairman Max Baucus (D-Mont.), is on record explaining creation of an exchange is among the conditions states must satisfy before credits become available. Indeed, all previous drafts of the law also withheld credits from states to push them to cooperate.

Employers can sue

Under the Congressional Review Act, Congress has 60 days from the date of issue to block the rule. Reps. Scott DesJarlais, R-Tenn., and Phil Roe, R-Tenn., have introduced a resolution. It may receive a cold reception from President Obama, but “taxation without representation” is a difficult position to defend. If that approach fails, states that have refused to establish a health insurance exchange, and large employers the IRS will hit with this unauthorized tax, could challenge the rule in court.

The authors of the Affordable Care Act wrongly assumed states would be eager to implement it. If saving the law from that miscalculation requires letting the IRS tax Americans without authorization, then it is s not worth saving.

*Modified from an article by Jonathan Adler, and Michael Cannon


Why HRAs Will Become the Foundation of Employee Health Benefits

New business methods and technology now allow employers to enroll employees in a single HRA software platform from which employees access their:

  1.     HRA benefits
  2.     HSA link to any financial institution
  3.     A Private Exchange for purchasing individual/family health insurance

HRAs started out as supplements to employer health benefit plans for incidental items not covered by traditional health insurance plans. However, because of their enormous legal flexibility and new technology designed to take advantage of this flexibility, HRAs will become the foundation of every employer’s health benefit plan.

For employers who offer group insurance, HRAs will become the front-end delivery vehicle of primary health benefits for fully-insured and self-insured plans. For employers who cannot afford a group health plan, HRAs are becoming the basis of a defined contribution health plan that enables millions of employees to purchase individual/family health insurance policies directly from an insurance company.

Whether as the front-end of an employer-sponsored group plan or defined contribution health plan, here are just a few ways HRAs can deliver better and more cost-effective health benefits to employers and their employees today.

(1) HRAs Improve Retention

The greatest challenge for employers today is retaining qualified employees. HRAs are extremely powerful for retention because employees accumulate for their future what they don’t spend today, but lose their accumulated balance when they quit (unless they meet employer-specified HRA retiree vesting requirements).  Additionally, employers can vary HRA benefits by class of employee to create further incentives for employees to stay and grow.

(2) HRAs Boost Recruiting Success

The second greatest challenge facing employers today is recruiting quality employees, whether for salaried and hourly positions. HRAs are the ultimate employee recruiting tool because they allow employers to afford and offer much better health benefits than their competition. In addition, using HRAs enables employers with group plans to offer better coverage to new employees by doing the following:

HRAs Eliminate Waiting Periods – New employees can enroll, submit claims, and have their claims approved for reimbursement, but not actually be reimbursed until the waiting period (e.g. six months) is complete.
HRAs Provide Coverage for Hourly, Part-time, or Seasonal Employees – Employees can receive HRA allowances tied to their hours worked but forfeit their entire HRA balance unless they work a minimum number of hours or return (after a seasonal layoff) within a specified time period.

(3) Allocate HRA Benefits by Class

Employers have always been allowed to allocate health benefits by using reasonable classifications with wages and retirement, giving different health benefits to employees based of job categories, geographical locations, etc.

But, before HRAs, employers lacked the technology and systems to offer health benefits packages tailored for each Class of Employee based on their recruiting and retention objectives. New HRA technology allows employers to set-up a completely different benefits plan for each Class of Employee (e.g. call center staff, managers, executives) and electronically administer such a different HRA benefits plan with electronic signatures and customized per-class plan documents and HRA SPDs (Summary Plan Descriptions).

(4) HRAs Improve Coverage for All Employees

Besides rising costs, every employee and employer has something they don’t like about their health benefits. HRAs allow employers virtually unlimited flexibility to add benefits (such as smoking cessation, weight loss programs, maternity supplements, or improved coverage for out-of-network providers).  Online tools connected to the claims processing system allow employers to monitor and control the cost of these additional benefits in real-time.

(5) Implement and capture savings from high deductible plans using HRAs

Using HRAs enables employees to move to high deductible plans.  Employers with fully-insured group plans can immediately save up to 50% on their existing group premium without reducing any benefits by switching to a higher annual deductible, and using their HRA to pay employee medical expenses under the new deductible. Employers who do this typically then give back about 1/3 to 1/2 of their savings to maintain the same level of benefits—for a net savings of 15%-30% after HRA reimbursements. Similarly, employers who use HRAs without a group plan can provide employees with funds to offset out of pocket expenses associated with lower-priced high deductible personal health policy.

These compelling benefits make HRAs a logical vehicle for employers of all sizes.

*Modified from a Zane Benefits Blog



Ravenous Congress Will Tax Jobs Out Of Existence For ObamaCare

By George Will

BLOOMINGTON, Ind. — Bill Hewlett and David Packard, tinkering in a California garage, began what became Hewlett-Packard. Steve Jobs and a friend built a computer in the California garage that became Apple’s birthplace. Bill Cook had no garage, so he launched Cook Medical in a spare bedroom in an apartment in this university town.

Half a century ago, in flight from Chicago’s winters, he settled here and began making cardiovascular catheters and other medical instruments. One thing led to another, as things have a way of doing when the government stays out of the way, and although Cook died last year, Cook Medical, with its subsidiaries, is the world’s largest family-owned medical devices company.

In 2010, however, Congress, ravenous for revenues to fund ObamaCare, included in the legislation a 2.3% tax on gross revenues — which generally amounts to about a 15% tax on most manufacturers’ profits — from U.S. sales of medical devices beginning in 2013.

This will be piled on top of the 35% federal corporate tax, and state and local taxes. The 2.3% tax will be a $20 billion blow to an industry that employs more than 400,000, and $20 billion is almost double the industry’s annual investment in research and development.

An axiom of scarcity is understood by people not warped by working for the federal government, which can print money when it wearies of borrowing it. The axiom is: A unit of something — time, energy, money — spent on this cannot be spent on that.

So the 2.3% tax, unless repealed, will mean not only fewer jobs but also fewer pain-reducing and life-extending inventions — stents, implantable defibrillators, etc. — which have reduced health care costs.

The tax might, however, be repealed. The medical device industry is widely dispersed across the country, so numerous members of Congress have constituencies affected by developments such as these:

Cook Medical is no longer planning to open a U.S. factory a year. Boston Scientific, planning for a more than $100 million charge against earnings in 2013, recently built a $35 million research and development facility in Ireland and is building a $150 million factory in China. (Capital goes where it is welcome and stays where it is well-treated.)

Stryker Corp., based in Michigan, blames the tax for 1,000 layoffs. Zimmer, based in Indiana, is laying off 450 and taking a $50 million charge against earnings. Medtronic expects an annual charge against earnings of $175 million. Covidien, now based in Ireland, has cited the tax in explaining 200 layoffs and a decision to move some production to Costa Rica and Mexico.

Already 235 members of the House of Representatives — 227 Republicans and eight Democrats — are co-sponsors of a bill to repeal the tax. Twenty-three Republican senators, but no Democratic senators, favor repeal.

The Democrats who imposed this tax on a single manufacturing sector justified this discrimination by saying ObamaCare would be a boon to the medical devices industry because, by expanding insurance coverage, it would stimulate demand for devices. But those insured because of Obama-Care will be disproportionately young and not needing, say, artificial knees. And well before ObamaCare, the law had long required hospitals to provide devices to the needy who are uninsured.

Unsurprisingly, Sen. Scott Brown, R-Mass., supports repeal of the tax. Surprisingly, so does his opponent, Elizabeth Warren, an impeccably liberal ObamaCare enthusiast who notes that in Massachusetts, the medical devices industry has 24,000 employees and accounts for 13% of the state’s exports.

Warren is experiencing another episode of New England remorse: “When Congress taxes the sale of a specific product through an excise tax … it too often disproportionately impacts the small companies with the narrowest financial margins and the broadest innovative potential.”

Well, yes. In 1990, when President George H.W. Bush’s recanted his “no new taxes” pledge, he enabled the Democratic-controlled Congress, with a legion of New England liberals in the lead, to impose a 10% tax on yachts costing more than $100,000.

Yacht sales plunged 70% in six months, a third of all yacht-building companies — many in New England — stopped production and more than 20,000 workers lost their jobs. In 1993, the tax, although not the damage, was repealed.

Given humanity’s fallen condition, almost everyone’s tax policy is: “Don’t tax you, don’t tax me, tax that fellow behind the tree.” There are, however, vulnerable wealth-and-job-creating businesses behind most


If Supreme Court rejects Obama’s health law, employers, insurers will drive their own overhaul

Chicago Tribune, By Ricardo Alonso-Zaldivar

April 24, 2012: If the Supreme Court strikes down President Barack Obama’s health care overhaul, don’t look to government for what comes next.

Employers and insurance companies will take charge. They’ll borrow some ideas from Obamacare, ditch others, and push even harder to cut costs.

Here’s what experts say to expect:

— Workers will bear more of their own medical costs as job coverage shifts to plans with higher deductibles, the amount you pay out of pocket each year before insurance kicks in. Traditional insurance will lose ground to high-deductible plans with tax-free accounts for routine expenses, to which employers can contribute.

— Increasingly, smokers will face financial penalties if they don’t at least seriously try to quit. Employees with a weight problem and high cholesterol are next. They’ll get tagged as health risks and nudged into diet programs.

— Some companies will keep the health care law’s most popular benefit so far, coverage for adult children until they turn 26. Others will cut it to save money.

— Workers and family members will be steered to hospitals and doctors that can prove that they deliver quality care. These medical providers would earn part of their fees for keeping patients as healthy as possible, similar to the “accountable care organizations” in the health care law.

— Some workers will pick their health plans from a private insurance exchange, another similarity to Obama’s law. They’ll get fixed payments from their employers to choose from four levels of coverage: platinum, gold, silver and bronze. Those who pick rich benefits would pay more.

“Employers had been the major force driving health care change in this country up until the passage of health reform,” said Tom Billet, a senior benefits consultant with Towers Watson, which advises major companies. “If Obamacare disappears … we go back to square one. We still have a major problem in this country with very expensive health care.”

Business can’t and won’t take care of America’s 50 million uninsured.

Republican proposals for replacing the health care law aren’t likely to solve that problem either, because of the party’s opposition to raising taxes. The GOP alternative during House debate of Obama’s law would have covered 3 million uninsured people, compared with more than 30 million under the president’s plan.

After the collapse of then-President Bill Clinton’s health care plan in the 1990s, policymakers shied away from big health care legislation for years. Many expect a similar reluctance to set in if the Supreme Court invalidates Obama’s Affordable Care Act.

Starting in 2014, the law requires most Americans to obtain health insurance, either through an employer or a government program or by buying their own policies. In return, insurance companies would be prohibited from turning away the sick. Government would subsidize premiums for millions now uninsured.

The law’s opponents argue that Congress overstepped its constitutional authority by requiring citizens to obtain coverage. The administration says the mandate is permissible because it serves to regulate interstate commerce. A decision is expected in late June.

The federal insurance mandate is modeled on one that Massachusetts enacted in 2006 under then-Gov. Mitt Romney. That appears to have worked well, but it’s unlikely states would forge ahead if the federal law is invalidated because health care has become so politically polarized. Romney, the likely Republican presidential nominee, says he’d repeal Obamacare if elected.

That would leave it to employers, who provide coverage for about three out of five Americans under age 65.

“With or without health care reform, employers are committed to offering health care benefits and want to manage costs,” said Tracy Watts, a senior health care consultant with Mercer, which advises many large employers. “The health care reform law itself has driven employers, as well as the provider community, to advance some bolder strategies for cost containment.”

First, employers would push harder to control their own costs by shifting more financial responsibility to workers.

Data from Mercer’s employer survey suggests that a typical large employer can save nearly $1,800 per worker by replacing traditional preferred provider plans with a high-deductible policy combined with a health care account. “That is very compelling,” said Watts.

It won’t stop there. Many employers are convinced they have to go beyond haggling over money, and also pay attention to the health of their workers.

“As important as it is to manage the cost of medical services and products, and eliminate wasteful utilization, there has been a strong recognition that ultimately healthier populations cost less,” said Dr. Ian Chuang, medical director at the Lockton Companies, advisers to many medium-size employers. His firm touts programs that encourage employees to shed pounds, get active or quit smoking.

Employer health plans were already allowed to use economic incentives to promote wellness, and the overhaul law loosened some limits.

A Towers Watson survey found that 35 percent of large employers are currently using penalties or rewards to discourage smoking, for example, and another 17 percent plan to do so next year. The average penalty ranges from $10 to $80 a month, but one large retailer hits smokers who pick its most generous health plans with a surcharge of $178 a month, more than $2,100 a year.

Overall, one of the most intriguing employer experiments involves setting up private health insurance exchanges, markets such as the health care law envisions in each state. Major consulting firms such as Mercer and Aon Hewitt are developing exchanges for employers.

As under the health care law, the idea is that competition among insurers and cost-conscious decisions by employees will help keep spending in check. Aon Hewitt’s exchange would open next January, with as many as 19 companies participating, and some 600,000 employees and dependents.

“The concept of an exchange does not belong to Obamacare,” said Ken Sperling, managing the project for Aon Hewitt. “We’re borrowing a concept that was central to the health care law and bringing it into the private sector. Whether the law survives or not, the concept is still valid.”
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Health Care Reform: Workers May Trade Health Insurance For Raises

Would you give up your health insurance for a raise?

A minority of big companies offered extra pay to workers who waived their health benefits last year. This practice, which was common decades ago, could see a resurgence once the biggest parts of President Barack Obama’s health care reform law take effect in 2014 and start to rearrange the health insurance market.

Last year, 17 percent of employers with at least 500 workers gave a little extra money to those who turned down an offer of health insurance, according to a survey conducted by the human-resources advisory firm Mercer that will be published later this month. The Huffington Post obtained early access to the data. The median amount of extra pay was $1,000, which is considerably less than the $11,664 average cost an employer and worker incur for job-based health insurance this year, according to the consulting company Towers Watson.

Jobs are the most common source of health insurance for working-age Americans and provide 154 million people with coverage, according to the Congressional Budget Office. But the implementation in 2014 of new benefit requirements on employers and individuals, along with the creation of health insurance “exchanges” and federal subsidies for individuals, families, and small businesses, will change how many Americans get health plans, unless the Supreme Court strikes down the law on constitutional grounds.

The health care reform law includes a “pay or play” requirement that companies with at least 50 employees must either provide employees with health benefits or pay penalties as high as $3,000 per worker to offset the government’s cost of subsidizing insurance coverage. Although jobs are projected to remain the number-one source of health coverage, some workers will be affected, since the penalty is less money than the insurance coverage.

In some cases, that will mean higher paychecks to make up for lost benefits. In 2006, Dallas resident Red Coine was offered that deal by Cisco Systems, where he was a network engineer working as a contractor. Coine, who is now 35, got an extra $200 a month and bought his own health insurance for $88, so he came out $112 ahead. “I never regretted giving up the company insurance, and no one ever mentioned to me or complained about not having it,” he told HuffPost via email.

The connection between jobs and health insurance has been weakening over the years for reasons unrelated to Obama’s health care reform law. Rising health care costs have led more employers to drop coverage: Between 2001 and 2011, the percentage of companies offering health benefits dropped from 68 percent to 60 percent.

The health care reform law created incentives that will lead some employers to maintain coverage or begin offering benefits, but cost pressures will likely cause other companies to stop providing health insurance to some or all of their workers. According to another Mercer survey, 91 percent of firms with at least 500 workers are likely to keep offering health benefits.

Employees of smaller companies are more likely to lose coverage, but are already more likely to not have it in the first place, according to Mercer.

Overall, 14 million fewer workers will get insurance from their jobs as a result of health care reform, and all but 2 million will find coverage elsewhere, thanks to the law’s federal subsidies and insurance market reforms, according to the Congressional Budget Office. Economists also predict companies that drop insurance for some or all of their workers will boost their compensation by raising pay or strengthening other fringe benefits.

People earning between 133 percent and 400 percent of the federal poverty level — $30,657 to $92,200 for a family of four this year — would qualify for federal tax credits to defray the cost of health insurance, which could make it cheaper than the coverage available at work, said Tom Billet, a senior consultant at Towers Watson.

Modified from Huffington Post


Most Small Businesses Not Planning for Health Care Reform According to Survey

Survey of true “small businesses” explores how employers feel about health care reform, why they provide coverage, and how far they’re willing to go to save money

Mountain View, CA – March 21, 2012 – The majority (85%) of small businesses are not making changes or long-term plans based on health care reform legislation, according to a recent survey of small business owners released today by eHealth, Inc.

Beginning in 2014, the Patient Protection and Affordable Care Act of 2010 (ACA) requires businesses with the equivalent of fifty or more full-time employees to provide health insurance coverage for their workers. However, businesses with fewer than 50 employees are exempt from this requirement, although employees may be required to purchase their own coverage.

eHealth’s Small Employer Health Insurance Survey focuses on these small businesses, many of them family-run. Nearly nine-in-ten (88%) of the small businesses responding to the survey had ten employees or fewer. The survey was conducted anonymously online between February 10 and March 13, 2012 and gathered responses from a total of 236 small businesses that had purchased group health insurance policies through

Based on their size (fewer than 50 employees) none of the businesses surveyed would be required by the ACA to offer health insurance coverage to employees in 2014. However, the majority (60%) planned to continue offering coverage for their employees in 2014. Among those employers who considered themselves knowledgeable about aspects of the ACA, a larger majority (69%) said they had no plans to stop offering coverage to employees. According to the survey, most employers feel they have a moral obligation to provide health insurance for employees or feel they need to continue to do so in order to recruit and retain talented workers.

Small businesses are still sensitive to health care costs, however, with nearly all respondents (95%) citing “affordability” as one of the two most important factors when choosing a plan. Small businesses are also open to creative solutions to reduce health coverage costs. Many are willing to drop benefits like dental and vision (58%) or consider raising deductibles and offering accident or critical illness coverage (74%) in order to keep costs lower and continue offering employees health insurance.
eHealth’s Small Employer Health Insurance Survey report can be downloaded in full here or through the eHealth, Inc. Media Center.

Additional Survey Results

  • Nearly eight-in-ten small businesses (79%) report spending $200 or more for health insurance per insured employees or dependent each month
  • A majority (53%) said they required employees to contribute 10% or less of the total cost for their own or their dependents’ monthly health insurance premiums
  • More than six-in-ten (61%) reported that enrollee deductibles on their group health insurance plans were $1,500 or less per year
  • One-third of respondents (34%) said they might consider dropping employer-based group health insurance beginning in 2014
  • A majority of respondents (53%) said that they always or sometimes impose waiting periods before allowing new employees to join the company health insurance plan
  • More than four-in-ten (44%) said they felt a “moral obligation” to provide employees with health insurance
  • Most small businesses identified “affordability” (95%) and “richness of benefits” (68%) as the two most important factors when choosing a health insurance plan
  • Only six percent considered the insurer’s brand a top-two factor when choosing a plan