Smart Benefits: The New Year Means New Benefit Decisions
Monday, December 31, 2012
Small Employers: To Offer or Not to Offer
Small employers will have to decide whether to continue to offer coverage since they are not subject to the employer mandate. According to a recent Kaiser Family Foundation study, 16 percent of employers with between 10 and 499 employees said they will terminate their coverage.
What does that mean for the employees? They’ll be subject to the individual mandate and have to either purchase through a state exchange or pay a fine at tax time. Since employees are used to employers choosing their health plans for them and handling enrollment, this change will mean a lot more responsibility on the consumers.
Will Large Employers Face Larger Numbers of Enrollees?
According to the Kaiser study, large employers are more likely to continue to offer employee health benefits, with only 6 percent of respondents saying they will cancel coverage once the state exchanges are fully operational. But they’ll likely have more employees on their plans – instead of off – because of the new full-time status rules.
Employers will now need to consider employees as full-time if they work an average of 30 hours a week, which may increase the number of benefit-eligible employees, particularly for employers in seasonal industries.
If the employer offers coverage that doesn’t meet essential benefits and is not affordable, employees may jump off the plan and opt for the exchange plan instead. What happens if too many employees leave the plan? The remaining population may alter the demographics of the group and negatively change the rates, increasing employer costs.
To avoid employees switching to the exchange plan, employers may want to add additional plan offerings that provide minimum levels of benefits that are affordable.
Education is Key
No matter what employers decide, they will need to notify employees of the exchange opportunity in March of 2013, with enrollment following in October for coverage start dates of January 1, 2014.
To help employees understand their new choices, employers need to start educating them now. While not all the information about the exchanges will be available until the latter part of 2013, it’s not too early to start preparing for the next New Year: 2014.
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