Company number crunchers are stressed. Workers twist in limbo. But health insurance advisers predict that when employers master the new math and consequences of Obamacare, most will opt to keep providing coverage.
The online insurance exchange, the marketplace that is a cornerstone of federal health care reform, starts Jan. 1. So does the mandate that all California companies with at least 50 full-time equivalent employees face penalties if they don't provide insurance that pays for at least 60 percent of their workers health care costs.
The fear, pushed by premium prices expected to rise higher and faster, is that employers will decide they can save money by dropping their insurance and absorbing the $2,000 per full-time employee penalty. Their workers would be pushed toward the new exchange, maybe with a salary hike aimed at defraying their burden, maybe not.
At Clean Diesel Technologies Inc. in Ventura, no decisions have been made. Company leaders say they need to know more about how the insurance exchange would work and how any decision they do make would affect their workers.
But they are intrigued by a provision of the law that means they would be exempt from penalties for their first 30 employees. If they dropped their insurance and sent employees to the new insurance market -- the health benefit exchange -- they would have to pay fines for only 50 of their workers.
"We do have to take a look at different options," said the company's human resources director, Alex Rivera, adding that decisions are driven by not only by the cost of the premiums but the cost of coordinating the coverage. "It may be in the future because perhaps it would alleviate some of the administrative burden for a company like ours."
There will be sticker shock come Jan. 1, said Chuck Rosen, of Simi Valley, president of the California Association of Health Underwriters. Some employers will also have to pay more to increase their benefits. Plans not only have to pay for at least 60 percent of health costs, but an employee's share of coverage can't exceed 9.5 percent of his or hers household income.
But if employers drop coverage, they'll have to pay the fines. They'll lose the tax write-off that comes with providing insurance. An employee who doesn't qualify for subsidies could end up paying more because their premiums won't be sheltered from taxes.
It means workers will expect more money to cover the dropped benefit.
"He's going to go back to his employer and say I need a raise. I can't afford my premium," Rosen said. "It's very, very shortsighted for an employer to drop that coverage. It very well may cost them more money in the long run. Number two, it's just going to alienate their employees."
Some companies are considering other options. Callan Carter, a San Francisco employment benefits lawyer, said one of her clients has decided to restructure a mid-sized company into four small businesses with fewer than 50 full-time equivalent employees. That means the firms will be exempt from the mandate to provide coverage.
Other employers are limiting their work weeks to 29 hours so workers will be defined as part time. Some companies are considering offering increased pay to help their employees shoulder the burden of insurance.
"I have heard some employers say 'Can I just drop my health insurance and just give them $200 a month?' " Carter said. "The answer is, 'Sure, but you still have to pay the fine.' "
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