Are Employee Benefits Still Benefiting Your Employees?

That’s the question many employers are asking.  The Affordable Care Act, also known as Obamacare, is changing the vehicle for how employers offer health insurance to their employees.  The Affordable Care Act requires all health insurance plans to be guaranteed issue, leveling the playing field for everyone, whether they had pre-existing medical conditions or not.   One of the main reasons employers felt on obligation to provide group health insurance was so that employees with health conditions would receive health benefits under a group plan.  

With the Affordable Care Act, that is no longer the case.  Not only can employees obtain guaranteed health coverage in the private market with more choices, eligible employees receive government-funded subsidies that can pay for a majority of the health insurance premiums for them and their families.  Families can obtain health insurance for as little as $1 a month with the federal government paying the rest.  Employees working at or near minimum wage may also qualify for Enhanced Benefits that may include plans with zero deductibles, $3 office visits and $5 for brand-name prescriptions.   No employer could afford to provide benefit plans this rich.  Another reason is the cost of family coverage under the employer’s group health plan.  Most employers pay 70% to 100 % of the employee’s cost of health insurance and the employee pays the premium if they want to cover their family.   With the cost of family coverage  over $1,00 a month, many employees simply cannot afford to cover their children and their spouses, leaving their family vulnerable without the protection of health insurance.

What are employers doing?  Many employers are  re-thinking their benefits strategy and dropping group health coverage in favor of providing employees a defined contribution towards the cost of an individual/family plan as described in a previous blog post.

AUTHOR - Ali Nagy