HCW Benefits Blog

Are employers considering dropping their benefit plans and paying the penalties? What are the costs/cons of dropping your benefit plan?

Contributor:
Laura Bibb, Compliance Officer
Hill, Chesson & Woody

There has been a lot of discussion in the media and among different groups about the possibility of employers dropping their benefits and paying the penalties instead.  Some things to consider:

• The penalties could increase if there is a mass drop of employer-sponsored coverage. Remember, the goal of healthcare reform is to get millions of uninsured Americans health insurance coverage. The federal government can't afford to provide coverage by itself.
• Higher earning workers may need to be paid more (those who don't qualify for the individual subsidies.) They currently don't pay 100% of the cost of their coverage. Through the Exchange they won't be eligible for assistance and will have to pay 100% of coverage essentially resulting in a loss of compensation.
• The ability to recruit, retain, and reward employees - especially for employers who are in a highly competitive market for employees.
• Loss of ability to affect employee's health through wellness programs affects productivity

Employees may not purchase their own coverage (individual penalties don't have much bite.) Large claims could cause financial stress on employees and affect productivity.