Health Insurance Navigator

By Lisa Zamosky

Among the endless predictions about the impact of the Affordable Act, is the possibility that employers will stop offering health benefits to workers.

Under the law, employers with 50 or more workers are required to provide coverage or pay a fine. The penalty, which is $2,000 for full time employees, is less expensive than providing employees’ health insurance, which is expected to cost on average $11,507 per worker in 2013.

For that reason, many people believe employers will drop insurance coverage, pay the less expensive fine, and send employees to the state-based insurance markets that will be up and running by 2014 to buy their insurance. But this ignores the fact that employers today are under no obligation to provide insurance to workers, yet they do. Despite its high cost, employees place a high degree of value on health benefits and employers believe offering them makes them more competitive.

Not Dropping Benefits Yet

A new survey just released by consulting firm Towers Watson supports the notion that employers find value in offering workers health benefits.

When asked about the likelihood of dropping health benefits and having employees buy their coverage on the health insurance exchanges, not one out of the 512 large employers surveyed, said it was very likely they would go that route. Only 3% said it was “somewhat likely” and 77% said it wasn’t likely at all.

In fact, the number of companies planning to offer active employees health benefits has actually increased — 88% said they intend to make health benefits available, up by 17% from last year when 71% responded positively to the question.

A Change in Long-term Approach

According to the report, employers remain highly committed to offering active employees health care benefits until 2015. That commitment starts to wane, however, for the long term. Near the end of this decade, employers say they are much less confident that they will offer health benefits:

• 45% said they are “somewhat” to “very likely” to offer health insurance to only a portion of their employees. Employees not eligible for coverage will be directed to the state-based insurance exchanges to buy coverage.
• Only 23% said they are very confident they will continue offering benefits for the next 10 years, a 50% drop from 2007 when 73% of companies said they would do the same.

Higher Costs

As I’ve discussed many times before, this report reinforces that employees can expect to pay for a greater share of their health benefits.

In fact, 55% of employers surveyed plan to require employees to pay a bigger share of their health care costs by raising the price of premiums. And, 67% are considering making changes to the level of coverage they provide spouses and dependents.

Between 2011 and 2012, employees’ share of their health plan premiums rose by 9.3%; workers are contributing almost 40% more for health care than they did five years ago.

Out-of-pocket expenses have risen too from 16% to 18% during the past year, with at least part of that increase due to nearly half of surveyed companies saying they’re charging employees more for plans that cover dependents.

What’s Your Health Plan?

With the passing of Labor Day we are unofficially entering fall, the season of open enrollment for health insurance for many employers nationwide.

What concerns do you have about choosing a health plan this year? Does your employer plan to increase costs or limit or change the kinds of health plans you have access to? Have you thought about your health care needs for the coming year and how you’ll choose your plan accordingly?

Share your thoughts in the comment section below. And if you have any health plan enrollment questions, ask them here. I’ll do my best to respond in an upcoming blog.