Smart Benefits: 3 Ways Obamacare Hurts Employees

Monday, October 07, 2013

Amy Gallagher, GoLocalWorcester Business/Health Expert

Obamacare may help some, but hurt others. How will you be affected?

With the federal and state exchanges open for business and open enrollment in full swing for January health coverage renewals, it’s quickly becoming clear that Obamacare will help some – but at the expense of others.

1. Age Rating Hurts Older Individuals

Even though lifestyle and behavior are often greater indicators of good health, small employer and individual rates are now based only on age. This approach will help the young but hurt older individuals who were hoping the exchanges would provide more affordable rates than their employer’s plans.

Age rating also poses a concern with employer discrimination practices in hiring. Until now, employers received an average composite rate that was guaranteed for the year, whether enrollment increased or decreased. Now employers, when purchasing coverage through the private market, have to absorb the cost of new employees added outside of their renewal month. Since rates will vary based on employee age, will employers hiring the rest of the year choose a younger candidate over an older candidate one to save money?

2. Dropping Spousal Coverage Forces Change

Employees used to covering their spouses may face big changes. That’s because many employers, in their quest to reduce costs, are eliminating coverage for spouses and only offering coverage to the employee and their children. Working spouses will need to turn to their own employers for coverage, while those who don’t work will have to look to a state exchange. If the spouse is young, securing affordable coverage through an exchange shouldn’t be an issue. But if he or she is older, coverage will likely cost more than when they were on their working spouse’s plan.

3. Full-Time Status Changes Employment Picture for Many

Originally, Obamacare mandated that 30 hours would become the new “full-time.” While this provision has been delayed, in anticipation, companies are already making changes to save costs that will result from the status change – which can be significant. For example, for one local employer in the tourism industry, reducing full-time status from 40 to 30 hours means boosting healthcare costs by 25% ($250,000).

To avoid this type of impact, many employers are starting to eliminate positions or cut back employees to 29 hours or less. And because of Obamacare, employees are unable to waive coverage in exchange for not losing hours, so instead are getting reduced to fewer than 30 hours – time they can’t afford to lose.

Amy Gallagher has over 21 years of healthcare industry experience guiding employers and employees. As Vice President at Cornerstone Group, she advises large employers on all aspects of healthcare reform, benefit solutions, cost-containment strategies and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, and is often quoted by national publications on the subject matter. Locally, Amy is a member of SHRM-RI, the Rhode Island Business Group on Health, and the Rhode Island Business Healthcare Advisory Council.