Small employers all over the country are faced with the dilemma of whether to start, continue or cease offering health insurance coverage to their employees under the Affordable Care Act. By offering Employer sponsored coverage, employees who would otherwise be eligible for premium tax credits or cost share reductions are ineligible as long as the coverage meets the minimum guidelines and the premium paid by the employee is affordable. To further complicate matters, Employers are faced with rising health care cost and the uncertainty of what impact the required benefit levels will have in the future.
The premium tax credits are based upon the household size and the total household income as determined by the Federal Poverty Level (FPL) and come in the form of premium subsidies. In Northeast Tennessee over 72% of residents qualify for the premium tax credit provided that they don’t have access to other coverage. If they fall below 200% of the FPL, they receive both the premium tax credit and a cost share reduction up to where the covered individual would have very little out-of-pocket cost.
For those employees who are eligible for the subsidy, the cost for coverage can be very affordable especially if they have a large family. The cost share enhancements can also result in benefit levels that would be hard to match for the price if offered through an Employer. To add fuel to the fire, these premiums and benefit enhancements will continue over time as they are based upon the household income of the family, not the price of the health insurance as compared to trending increases that Employers will face.
So the question remains, should I continue offering coverage or cease? If every employee received the subsidy, then the answer is fairly simple. The problem is that there will be employees who will not be eligible who will have to pay more, whose premium will include trend increases, who lose a valuable employee benefit. There are also those who would qualify for the subsidy but will not receive it because they have access to their spouse’s coverage even if it is not affordable.
A lot of Employers are taking a wait and see approach. Some have even renewed their health insurance early so that they can delay having to comply with the benefit level requirements and taxes that are contained within the premiums under the Affordable Care Act. If you need assistance in trying to figure out the direction that best fits your situation, please contact Phil Ketron at (423) 279-9060.