Recent research shows that more small employers plan to drop their health plans than larger employers after healthcare reform is firmly in place.
Once 2014 rolls around employers have two choices:
- offer employees health coverage under the reform rules, or
- pay a penalty (which will be used to help employee seek coverage on the individual market).
So what are they going to do? The vast majority will keep offering health coverage, despite the fact that many may be able to save a great deal of money by simply cutting coverage and paying the penalty.
Reason: Organizations are saying they are not yet willing to lose control over perhaps the most important employee benefit they offer, according to Mercer’s 2010 National Survey of Employer-Sponsored Health Plans, which tracked the plans of 2,800 employers.
Some findings from the survey:
- Only 20% of small businesses (those employing between 10 and 499 workers) plan to drop their medical plans after insurance exchanges become operational in 2014
- 6% of medium-sized businesses (those employing between 500 and 9,999 workers) plan to drop their medical plans in 2014, and
- a scant 3% of large businesses (those employee 10,000 or more workers) plan to drop coverage once the “play or pay” rules kick in.
Small business is more vulnerable
Why is dropping health coverage so much more appealing to small businesses? They have little purchasing power and are therefore more vulnerable to large rate increases.
In addition, these businesses generally employ lower-paid workers and suffer from high turnover rates — which drive up administrative expenses and, in turn, premiums.
What’s your company planning to do — keep offering health coverage or pay the penalty? Let us know in the Comments Box below.