Employee Mutiny

[bedlamins]

I will be the first to admit that my knowledge of the ACA impact on health insurance is dwarfed by the frequent posters on this board. However, for me I have asked a couple of people that I know that own businesses (friends not clients) how comfortable the meeting with their employees is going to be to announce that they will have to buy insurance through the exchange. The consensus (small sample size granted) is not at all.

First, any business that immediately dumps their plan and sends employees to the exchange and it ends up being the train wreck that some predict will have an employee mutiny on their hands. Contrary to popular belief, some employers actually like their employees and want to do right by them. This could be a massive distraction that owners avoid like the plague.

Secondly, group health will still be considered a mandatory part of the compensation package particularly among high earners. If you sell widgets and the top selling widget salesman is interested in working for you, how comfortable are you going to be telling him or her that you do not offer group health and he has to go to exchange? Particularly if the widget salesman down the road is keeping his group plan and wooing said salesman.

Lastly, telling people that you can no longer afford to insure them runs the risk sending a message to the employees that the company is struggling. Office rabble rousers love this type of stuff. "He says that it is better for us to go to the exchange but what the real problem is our sales are down 25% and he can't afford it anymore. Layoffs are next."

The math is straight forward. The emotional aspect is not.

 

[RayNY]

My question to you is, how are you doing math without numbers? As far as I knew, Alabama didn't release rates.

Large employers are unlikely to drop coverage, agitate employees, just to have to re-instate it in a year. Most will continue offering as they always have because 1) it's the right thing to do, and 2) because it's a good business decision.

Small employers may be eligible for tax subsidies/credits through SHOP depending on their size/average income. In a place like Alabama (in contrast to NY), small businesses will have a higher average subsidy (because of the lower average wage) and lower premiums (at least in comparison to some other states).

Sit back and wait for the information to come in, crunch the numbers, and make a decision. When you have data to back up your decision, it will be much easier to come up with a plan of action, whether it's to change contributions, drop, or retain coverage.

 

[djs]

A business owner can sell it as a benefit to the employees, not as a negative. Not that hard to do, since very few people even come close to understanding what is and what is not covered by Obamacare. Most assume it covers all expenses, better than their current group plan with deductibles and stuff.

These people will jump at the chance of going to the exchange.

Then explain with current rules, the family isn't part of the 'affordable' test, making it very expensive for the employees portion of the group benefit to continue. Much better to go to the exchange....

Its all in how they 'inform' the employees.

Dan

 

[Yagents]

It depends on the type of business (restaurant, etc), and the type of income levels of the employees.

Many lower income employee businesses will be doing their employees a favor by dropping the group plan and going to the exchanges.

Assuming IFP prices will be the same/similar as group prices, it's a wash for higher income employees except losing the tax deduction for premiums through salary reduction.

 

[djs]

Assuming IFP prices will be the same/similar as group prices, it's a wash for higher income employees except losing the tax deduction for premiums through salary reduction.

Hence, not even close to a wash..... This can amount to 20-30% of the insurance premium.

 

[stuy119]

Unintended consequences:

When groups drop their plan to send EEs to the exchange, it will (most likely) benefit the EEs directly with lower rates on a monthly basis.

ERs will, because of the savings, likely give out some raises to pacify employees over their "loss of income." The ER doesn't want to look like he made the cuts to solely pad the business profit at year-end, and will reinvest some (not all) back to the comp plan.

Subsidies will be cut to those employees, because raises will likely put them in a different tax bracket.

EEs will be mad at being paid more. ER won't know what to do, but will have an unruly mob on his hands.

Chaos.

 

[Ann H]

This is where an agent who knows the needs of the business (or does fact-finding on a new group) can guide. Most groups I am talking to are wary of "dumping" their employees into this new market with such instability. They would rather wait and let the dust settle. This clearly doesn't apply to groups that would clearly benefit from subsidies and cost reduction.

I think that within 3 years, the small group market will implode into IFP, provided that the industry remains in Obamacare as we know it today. However, during that time, I think groups fall into two main categories.

Category 1 - better off with the exchange
* If your laborers are low income and will get subsidies
* If your ER contribution is keeping families from accessing subsidies
* If your business can't afford premiums anymore
* If the administrative hassle of group insurance is burdensome
* If your employees want to shop on their own, or dislike your employee benefit plan

Better off with group coverage
* If most of your employees won't qualify for subsidies and you want to keep a tax deduction for ER premiums, plus Section 125 pre-tax payroll deductions for employees' payments. This is worth about 25% to employees alone, and might make up for lost subsidies.
* If you still want to contribute to the emlpoyees' premium, but are blocked by the double-dipping problem for subsidized employees, the HRA stand-alone problem, or the increased wage problem where employees are bumped into a higher percentage of FPL.
* If you are competing against the big-boys, and group insurance is expected in your industry
* If your employees are accustomed to buying insurance on-the-job and are leary about shopping on their own
* If you feel a moral responsibility to look out for the welfare of your clients in this regard.
* If your area has skinny networks in the exchange and you want to offer better networks, benefits, Rx formulary, etc., which can only be obtained in the group market in your area.
* If you qualify for the SHOP business tax credit (otherwise, why would any group enroll in SHOP?)

 

[taterpeeler]

ann, im on the shop webinar at this very moment... how do you get the tax credits you mention?

 

[ABC]

Group size and SIC code will pay a huge factor on keeping a group health plan.


Any group that has many hourly employees are going to be on the chopping block unless the employer is paying dam near 100% of the premium.

Wait until those owner see the new rates.
Wait until the employees see their new contribution levels.

You may very well be right to a certain degree.

I can tell you my block of client 80% will drop group benefits because of cost. Most of my blue collar clients can barley meet participation. I am going to advise them to drop and place the employees on Individual plans.

Your local economy must being doing really well for an employee to walk a way from a job.

 

[bedlamins]

The point was not to get into a numbers mess. My point was this decision for some employers will go beyond numbers. What percentage of companies offering health now want to do it? Probably close to zero. They do it to retain good employees.

The way that I see it is the exchange has two major challenges. One, getting the thing off the ground. Secondly, and more importantly, is the pricing. How in the world are these carriers setting rates without a clue as to the risk pool that is coming in? What possible models are being used? Even the rigged CBO conceded that there is no way completely eliminate adverse selection.

Maybe I'm whistling past the graveyard, but I'll believe that group health goes the way of the dinosaur when I see it. If the exchange becomes a cesspool of sick people, poor people, whipsawing premiums, and general incompetence, then people will avoid it like the plague regardless of subsidies.

Fools rush in where angels fear to tread. One can only surmise that is the bet that UHC (at least in my state) and some others are making.