• FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR

  • LOGIN
  • SIGN UP FREE

HR Morning

  • FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • Performance Management
  • HR Technology
  • More
    • Leadership & Strategy
    • Compensation
    • Staff Administration
    • Policy & Procedures
    • Wellness
    • Staff Departure
    • Employee Services
    • Work Location
    • HR Career & Self-Care
    • Health Care
    • Retirement Plans

Healthcare pay or play: Tough issues for employers to consider

mberry
by mberry
August 15, 2012
2 minute read
  • SHARE ON

It’s a fact: The health care reform law’s individual mandate penalty would cost companies far less than providing health insurance for employees. But cost can’t be the only factor companies use to decide whether to drop coverage when the mandate takes effect in 2014.
Companies have until January to make a decision: offer healthcare coverage to employees even though it’s expensive or pay the law’s individual mandate penalty which is $2,000 per employee. In other words, pay or play.
Compare that to the average premium cost of $5,000 per individual and $15,000 per family and dropping coverage seems like the most cost effective option.

But is it a good idea to drop coverage?

However, health insurance is a basic benefit that candidates use to evaluate job opportunities. If a company doesn’t offer health insurance to its employees, where does that leave HR when it comes to recruiting and retaining top-notch workers?
It leaves them at a serious disadvantage. HR pros will have to answer:

  • Why the company is dropping coverage and sending employees to state health exchanges
  • What exactly employees need to do to get coverage elsewhere, and
  • What the company is doing to help employees afford coverage on their own

Drop coverage, boost pay?

The question of whether to adjust salaries after dropping coverage is a tricky one. Industry research shows that employees feel as though comprehensive benefits, including healthcare, are as important as the amount of their paycheck.
If the company decides to bank the money it saves from dropping coverage instead of boosting salaries to make up the compensation gap, HR will have to show employees and recruits how much better employees have it there than if they worked at a company that doesn’t offer healthcare coverage.
A recent survey indicates companies do indeed worry that dropping coverage will hurt their ability to recruit top talent. HighRoads, an HR/benefits service provider, polled 70 employers, 30% of which were from the healthcare/hospital industry. Nearly two-thirds (65%) said they’d ditch their healthcare plans if most of the companies in their industry did the same. And 84% said they wouldn’t eliminate health insurance if only a few companies in their industry dropped coverage.
So if the company drops coverage, and doesn’t increase base pay rates, it’s likely that employees will see the move as a pay cut – and recruits will think the company’s cheap. Consequently, companies that go this route may have no choice but to roll over some of the cost savings into boosting salaries in order to compete for the best talent.

Get the latest from HRMorning in your inbox PLUS immediately access 10 FREE HR guides.

I WANT MY FREE GUIDES

Keep Up To Date with the Latest HR News

With HRMorning arriving in your inbox, you will never miss critical stories on labor laws, benefits, retention and onboarding strategies.

Sign up for a free HRMorning membership and get our newsletter!
  • This field is for validation purposes and should be left unchanged.
HR Morning Logo
  • Facebook
  • Twitter
  • Linked In
  • ABOUT HRMORNING
  • ADVERTISE WITH US
  • WRITE FOR US
  • CONTACT
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • HR Technology
  • Performance Management
  • Leadership & Strategy
  • Compensation & Payroll
  • Policy & Culture
  • Staff Administration
  • Wellness & Safety
  • Staff Departure
  • Employee Services
  • Work Location
  • HR Career & Self-Care

HRMorning, part of the SuccessFuel Network, provides the latest HR and employment law news for HR professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day’s headlines, HRMorning delivers actionable insights, helping HR execs understand what HR trends mean to their business.

Privacy Policy Terms of Service
Copyright © 2021 SuccessFuel

WELCOME BACK!

Enter your username and password below to log in

Forget Your Username or Password?

Reset Password

Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.

Log In

During your free trial, you can cancel at any time with a single click on your “Account” page.  It’s that easy.

Why do we need your credit card for a free trial?

We ask for your credit card to allow your subscription to continue should you decide to keep your membership beyond the free trial period.  This prevents any interruption of content access.

Your card will not be charged at any point during your 21 day free trial
and you may cancel at any time during your free trial.

preloader