Several trends in current as well as long-range plans are developing for private employers concerning healthcare. In terms of immediate developments, several large employers, including United Parcel Service and Delta Airlines, have announced that they will remove thousands of spouses from their healthcare coverage because they are eligible for coverage elsewhere. Delta accompanied its August announcement with a letter to all employees explaining that complying with the new healthcare law will cost the company and its employees tens of millions of dollars a year. Other cost increases cited by Delta include a $63.00 fee per covered health plan participant charge that will start next year, and other cost requirements of expanded coverage of dependents.
r 2014, ObamaCare requires large employers to cover workers, but not dependent children. For 2015, the requirement to cover dependent children applies, but the dependent children coverage does not have to be affordable.
One of the many controversial features of ObamaCare is that it bars employees from buying subsidized coverage through the exchanges if they have the opportunity to buy affordable insurance through their own employers. Many employees would actually be better off if their employers did not offer affordable health insurance. Starting in 2014, if household income falls below 400% of the federal poverty level, which is approximately $46,000.00 for an individual, or $110,000.00 for a family of five, employees are likely to qualify for a tax credit to help pay for health coverage purchased through state exchanges. The tax credit could make individual coverage more affordable than employer-provided plans. Employers are reluctant to eliminate their plans, however, as their most skilled or highest-paid employees earn too much to qualify for tax credits in the State exchanges and employers feel they need to maintain their healthcare plans for competitive reasons. In September, Trader Joe's, the supermarket chain, announced it would end health benefits for part-time workers, instead giving employees a $500.00 payment and sending them to the State exchanges. Trader Joe's explained that with the tax credits available there, most workers would get a better deal than the company could offer.
Another development particularly for larger employers, is the use of so-called "private" insurance exchanges. Recent examples include Walgreens, Sears, Darden Restaurants, and IBM, who are planning to give employees and/or retirees vouchers to shop among competing insurance plans on private exchanges. Private exchanges are run by outside benefits companies and typically offer more choices than those offered by employers. Employers contribute a set amount and employees choose which plan they prefer. The private exchanges are, in many respects, similar to the state exchanges required under ObamaCare. According to the consulting firm Accenture, it is estimated that more than a quarter of people now covered by insurance through their employers will be getting their benefits this way within five years. An insurance company spokesperson describes the move to private exchanges as, "An irreversible trend from defined-benefit to defined-contribution employer-based health coverage." Employees would search for insurance plans on the private exchanges much like they search for airline flights on Expedia. Consumers would thus have the option of choosing lower premiums for higher deductibles and a narrower network for doctors and hospitals. According to a survey by Towers Watson, among employers of less than 1,000 workers, about four out of five intend to offer a high-deductible policy next year. Such plans may be encouraged ironically by ObamaCare's so-called "Cadillac tax," which begins in 2018, in which employers will face a 40% tax on premiums that exceed $10,200.00 for individual coverage. Raising deductibles may be the easiest way to keep premiums down to avoid the tax.
Still another approach concerns so-called "mini-med" plans, which are most common in low-wage industries such as retailing, restaurants and agriculture. Such plans offer relatively cheap coverage, with premiums around $100.00 a month, and also require smaller co-pays and deductibles. Sometimes employers even pick up the entire cost. The disadvantages are that the benefits are quite limited, so policyholders who suffer serious accidents can face big medical bills. Currently some 4 million people are enrolled in mini-med plans, which cap benefits to participants, sometimes as low as $3,000.00 per year. Some employers say such mini-med plans are good for workers, as otherwise workers simply would not sign up due to the high cost.
