For employers, the reasons keep stacking up. Reasons to drop health insurance, that is. No, it hasn’t happened yet, but many employers have yet to feel the pain of all these new changes. We’ve written extensively about these in the past, but here’s a quick refresher:
The Family Glitch: Due to the ACA’s weird definition of “affordable,” employers that offer group health insurance usually block not only their employees but the employees’ family members from receiving a premium tax credit in the individual market. So far, there hasn’t been much backlash on employers that do offer health insurance, especially when they’re not required to, but then again, a lot of people haven’t yet figured out how the subsidies work.
Rising Premiums: This is especially true in the small group market. Modified Adjusted Community Rating, which eliminates medical underwriting for groups with 50 or fewer employees (and 100 or fewer next year), will cause the price to increase significantly for healthier groups when they move into ACA-compliant plans.
More Paperwork: HR managers already had trouble keeping up with all the fiduciary requirements that come with offering a group health plan. And now there are even more requirements. For applicable large employers, their first reports under sections 6055 and 6056 of the tax code are due in February of 2016.
Again, many employers have yet to feel the full impact of the ACA, but they soon will. And now, since we’re getting closer and closer to 2018, employers need to start thinking about the Cadillac tax as well. It’s been the subject of a number of recent articles, and both Republicans and Democrats are publicly voicing their concerns.
The NAHU Newswire summarizes an article from today’s Capital New York: “New York state legislators on both sides of the aisle are concerned that the ACA’s so-called Cadillac tax, which takes effect in 2018, ‘will have a ‘devastating effect’ on health plan coverage for both public and private employees.’ Assembly health committee chair Richard Gottfried (D) and Senate health committee chair Kemp Hannon (R) both raised concerns about the tax on high-cost health plans during an event on Friday organized by the Manhattan Institute. Gottfried said the ‘approach of the Cadillac tax ought to be regarded by almost everybody as an oncoming train or worse,’ while Hannon warned that many unions and large corporations could be hit with the 40-percent excise tax.”
The Cadillac tax is still a couple years off, but larger employers are already planning for it. And for employers who are looking for an excuse to stop offering coverage, this certainly gives them one (if they didn’t have enough already). As more and more companies look at the possibility of dropping coverage, or at least limiting the coverage provided to lower-paid employees, brokers need to make sure they have a strategy to help employees and dependents who are no longer benefit eligible. This one’s worth taking a look at.