Group health insurance was first offered as an incentive by employers during World War II when wages were frozen and many of the labor force was in the military. Employers could not offer raises or signing bonuses in the form of cash. Employers had to be creative if they wanted to entice and retain the best workers.
Today, there is no wage freeze. Employers are free to offer raises and signing bonuses if they choose. However, in this economy, that does not happen as often as it did in the 1980s. Many workers are lucky if they get a ham at Christmas.
The tradition of employers offering health insurance to employees is only a tradition. Federal ERISA laws regulate what an employer is allowed to do if he offers a group benefit plan but does not mandate that all employers offer group health insurance.
Heaven knows there is much to criticize Obamacare about. However, just as it is not always the quarterback’s fault when they lose a game. If your employer cancels your group health insurance, it is not necessarily the fault of Obamacare.
Health insurance premiums have been increasing for several years. In this post I will not try to explain why that is or who is to blame. Suffice it to say that it has been several years since premiums decreased.
The trend line indicates that as health insurance premiums increase, employers have been looking for ways to offset those increases. The first thing they tried was to modify the benefit packages they offered but eventually the premiums crept right back up.
Next, they elected to make employees pay more towards their benefits. That backfired. It only made employee morale decline.
Their final step is to cancel their group plan. Employers do that when the increase in quality health insurance exceeds their ability to subsidize the employee’s premium.
Employers who make this election in 2012 are not doing it as a direct result of Obamacare. They are doing it simply because they are no longer able to afford the premiums.
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Everything we know about health insurance changes in 2013 under current law. It is expected that modifications and adjustments will be made to Obamacare during the next congressional session. However, no American should make plans based on what might happen.
In this post I will try to explain what could happen if the law remains as it is.
LARGE EMPLOYER’S DILEMMA
Section 1513 – ‘‘(1) any applicable large employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer sponsored plan (as defined in section 5000A(f)(2)) for any month, and
‘‘(2) at least one full-time employee of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee, then there is hereby imposed on the employer an assessable payment equal to the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
The PPACA does not mandate that large employers (more than 50 full-time employees) maintain group health insurance. What it does is penalize large employers if they cancel their group plans and just one employee applies for and qualifies for federal subsidy of their health insurance.
There is probably not much that a business with 100 or more employees can do to escape Obamacare’s new penalty. However, I do expect businesses that employee just over 50 full-time employees to lay-off or cut the hours of their employees so that they are not subject to Obamacare’s penalties.
Those who are affected may not be able to pay their bills but at least they will have health insurance in 2014.
SMALL EMPLOYER’S CHOICE
The PPACA authorizes the creation of a new type of Exchange for Small Businesses called a SHOP Exchange. These Exchanges are places where businesses with fewer than 50 employees may purchase group health insurance that meets the Essential Benefits criteria.
The one thing to remember is that if your employer elects to use the SHOP Exchange, there is no difference from the current system. In order to have your health insurance premium supplemented by your employer you must give control of the plan to your employer. In other words, your employer, and not you, will determine which plans are best for you.
Section 1312 “EMPLOYER MAY SPECIFY LEVEL.—A qualified employer may provide support for coverage of employees under a qualified health plan by selecting any level of coverage under section 1302(d) to be made available to employees through an Exchange.”
It is true that we cannot blame everything on Obamacare. There are other variables at work when pricing health insurance.
However, as Obamacare enters its final phase in 2014, it must accept some of the blame for problems many American workers find with health insurance.