With expenses rapidly rising for healthcare coverage for employees, employers have to reevaluate how they can afford to carry health insurance for their staff. To make this process even more complicated much of Obamacare will become effective this year, causing many employers to turn to insurance brokerage firms for help in sorting through the many changes in healthcare costs and coverage.
So how will Obamacare affect employee coverage and what at what cost? Will the majority of the cost of healthcare coverage be passed on to the employee? And will they be able to afford it? These are some of the concerns for workers who depend on affordable healthcare for themselves and their families.
I met Dan Sullivan, Benefits Consultant at USI, the 3rd largest Employee Benefits firm in the U.S. specializing in mid markets (50-2500 employees), who introduced me to Scott Welch, SVP, Employee Benefits for USI. I asked Mr. Welch about the changes being made in healthcare coverage and what some of the trends are.
USI is deeply vested in securing the best plans for a company and their employees in healthcare coverage, dental, life, short term/long term disability and vision. They work on a fee basis rather than a commission of sales which gives them greater leverage in negotiating coverage with insurance companies.
Not a fan of Obamacare, I was delighted to hear from Mr. Welch that there are some real benefits for employees in this new bill, along with keeping them quite busy interpreting the new regulations and in helping client companies implement all the upcoming changes. Selecting a comprehensive healthcare plan for employees is much more complicated than in the past.
Currently in the Obamacare bill if an employer with over 50 employees chooses not to offer health insurance to their employees, they will owe the government $2,000 per worker after the first 30 workers, which means they get a free no penalty on the first 30 workers then the fines begin.
So the cost for a company with 51 employees would pay $42,000 a year to the government in fines for employees working 30 -plus hours. Clearly this is an incentive to carry insurance on employees and according to Mr. Welch, most companies do.
Yet, the way they cover their employee’s healthcare benefits will be different going forward. More and more companies are instituting a defined contribution plan where a company will offer a choice of 6-8 plans that an employee can choose from with varying levels of healthcare and drug coverage based on the amount of deductible. For example, a company would give you $200/ month and you pick your plan. You can spend it how you want. You can spend $50/month with a high deductible and keep the $150; it's your choice.
This type of coverage spreads out the risk for the insurance company and allows individuals workers to have greater control of their coverage which could save them money. It appears to be a win-win for both the company and employees. There is also a trend toward preventive care which would offer free cost to routine health exams such as a mammogram or blood tests. This will remove barriers to preventive healthcare, yet according to Mr. Welch about 25% of current healthcare plans are exempt since they are grandfathered in.
Employee healthcare coverage is complicated. But will be beneficial for many who live a healthy lifestyle and who take generic drugs as an option for branded drugs with patents still in force. Pharmaceutical companies will be charging more for their specialty/therapeutic drugs that according to the new laws will be able to maintain a longer patent on their drugs, in some cases forever.
My advice is to pay attention to your current healthcare plan and when seeking a new opportunity look closely at the companies who offer the best healthcare coverage. For more information on the services CSI offers, contact Dan Sullivan at 312/442-7251 or firstname.lastname@example.org.