Health care reform spawns complexities

February 4, 2012

John Stossel [Jan. 9 Forefront] did a nice job capturing much of the concern and uncertainty of Obamacare by employers.

Besides the points that Stossel made, here are a couple of things that are often overlooked or swept under the rug:

1. The $2,000 penalty is just a teaser rate to get employers to think they will save money. It is estimated the penalty will increase to somewhere in the $5,000-$8,000 range in less than five years.

2. Initially, just having to pay the penalty might seem like a nice cost savings for employers, but only a small percentage of employees for many employers will be eligible for the subsidies to purchase an exchange plan.

Therefore, employees not receiving a subsidy will look to their employer to fund all or a portion of the exchange plan cost. Otherwise, those employees just took a big hit to their compensation, because they now have to buy a plan on their own that their employer was paying most of the cost for before.

There are ways for employers to calculate and project what the alternatives might cost. But most employers don’t know where to go for this, think they can’t afford it, or just don’t know if it makes sense to analyze something that few seem to understand and might change dramatically in the near future. There are critical decisions that will need to be made by employers in the next 18 months that will determine the success of their business.

Ned Broadwater
client executive of employee benefits, Gibson Insurance Agency Inc., South Bend

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