Book: It No Longer Makes Sense for Employers to Offer Health Insurance

Brian Anderson

Executive Editor
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The authors of a new book (link to article about it below) argue it no longer makes financial, legal, or social sense for U.S. employers to provide health insurance to employees, and predict more than 100 million Americans will move from employer-provided to individually purchased health insurance over the next 10 years.

Please check out the story, and come back to share your thoughts on their stated conclusions and predicted demise of employer-provided health insurance.

Insurance Forums | New book says with Obamacare it no longer makes sense to offer employer-provided health insurance
 
I completely 100% agree. It is a huge burden to businesses to be responsible to provide this to their employees. If this was not the reality I can't help but to believe businesses would be far more efficient and profitable. It's more than just paying premiums, you have administrative overhead that can sap a huge part of the balance sheet.
 
This is silly wishful thinking.

To be clear, it has NEVER made sense for employers to be responsible for healthcare of the employees, but yet, it has happened.

The government, with one hand, encourages it, while the other hand discourages it. Nothing like being for something before you are against it, over and over again, even at the same time.

No doubt, lots of small businesses will benefit (and the employees will benefit) by dropping coverage. This will probably happen.

Larger businesses will continue to offer coverage for the foreseeable future. The government requires it. There will be huge changes on how they offer it, sure, but they will still offer it.

Dan
 
Employer based health insurance made sense when the govt froze wages and the unions figured out a way to increase "pay" without raising wages. Employer paid health insurance bypasses the tax grinder resulting in more usable net pay than a traditional pay raise.

A $1000/mo pay raise costs the employer around $1150 (gross wage + FICA + FUTA + SUTA + WC) and nets the employee around $700 (depending on their tax bracket, W4 exemptions, etc).

That's a sizable spread.

The employer can reduce the $1000 in wages to $800 or so in health insurance contribution, saving roughly $350, and the employee get's a benefit that can't be matched in the free market (as long as they don't qualify for a taxpayer subsidy).

This damn Obamacare screws up everything.
 
Over 95% of my groups are wanting to keep their benefits, and or INCREASE them. I have small businesses coming to me to write group insurance to "rescue" their employees OUT of Obamacare. They also want benefits to compete with the bigger business, and/or to attract and retain skilled employees.

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By the way, Somarco, that was an incredible post you wrote, that perfectly explained the concept of pre-tax benefits.
 
By the way, Somarco, that was an incredible post you wrote, that perfectly explained the concept of pre-tax benefits.

Thank you kind lady.

Several years ago I considered associating with a firm that had a "trick" to reducing payroll costs but did not involve health insurance. They had a slick presentation that elaborated on the flip side of a $1000/mo payroll.

Whatever they were doing made a lot of sense but was too dang complicated for most employers to follow. I usually have a knack for explaining things in ways for people to understand but never could break through with this plan.

I felt like officer Obie with the 8 x 10 color glossy photos with circles and arrows and an explanation on the back of each one trying to show them to the judge with the seeing eye dog.
 
For the most part I disagree with the book........First of ALL RICK Z is in the business of selling the service of his company (ZANE benefits) that advocates termination of group plans..........WRONG............He is a salesman, not a unbaises consultant........Number 1, in my state ( NY) individual plans are HIGHER ( 15%-20%) in cost then group plans. Number 2, there are more plan options in group plans then individual plans, again in my state(NY)..And Three group plans have a tax deduction for the employer and pre-tax deductions for employee contributions...........Unless someones income is really LOW and unless the subsidy out ways ( and yes sometimes it does) the benefits of group plans I would advocated to keep group plans in place. Also groups under 50 FTE have a choice........to go to the exchange or maintain a group plan.....We have some groups that have a group plan and some EEs are on the exchange, no pentalties. The carriers in my area no longer have participation requirements....due to the individual mandate.
 
mking,

In NY, individual plans were markedly cheaper than group plans last year, when the book was written.

Three group plans have tax deductions? They all do...

Pre-tax deductions for employee contributions on group plans? Are you sure?

Group plans with some individuals on the exchange (with a subsidy) will generate a penalty. You may not have gotten one yet, but it's clearly a penalty generating decision.

Some carriers here still have participation requirements, notably, Oxford/UHC.

Not paying is always cheaper than paying for the employer. It may not be better for the employee, but they're not the ones making decisions. It makes financial sense for many companies to drop coverage and send them to the exchange.
 
I do have people on the NYS exchange but the time spend and income earned is a loser.....not really cost effective,,........I am already seeing a lot of service work with these individuals.....Also I see a RISK because what we are doing is effecting there tax returns,,,this coming april for the first time,,,,a real risk,,,,,,,,I have clients sign a hold harmless agreement...........because I see potential risk in this area,,,,,,,,,I am not taking on any NEW ON exchange clients...due to these issues,,,,,,,,,
 
Yes, it's not worth the hassle for many brokers to write on-exchange individuals, but what does that has to do with the legitimacy of the claim that it no longer makes sense for employers to offer health insurance? Our livelihoods don't factor into their decisions.
 

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