Employers may want to increase employees' compensation with the intent that additional compensation can be used to purchase coverage on the federal- or state-based exchanges. Alternatively, employers can provide employees with additional pretax flexible spending credits that can be used to pay for other health and welfare benefits.
Sending employees to either the government-sponsored or private exchanges will now be viewed by regulators as if you were providing no health coverage to your employees, even if you provide employees with money to purchase exchange coverage.
Employers should compare the quality of exchange coverage to its current group health plan offering, and also evaluate what peer employers are doing from an employee retention and recruiting perspective.
Employers should weigh the fact that depending upon the demographics of its employees, a low-paid employee may be eligible for a government subsidy toward the cost of his or her coverage through the government-sponsored exchanges, making the government-sponsored exchanges a more affordable option for that employee and his or her family.
If an employer is the only one in its peer group or geographical area not offering group health coverage, the employer will need to consider the competitive disadvantage of eliminating group health coverage. On the other hand, if the employer is the last in its field that continues to offer group health coverage to its employees, it also may be at a competitive disadvantage.
Should your company continue to offer retiree medical coverage? Both pre- and post-65 retirees are typically expensive to insure. Now that coverage will become even more expensive:
Beginning January 1, 2013, the tax deduction for the Medicare Part D subsidy was no longer available to employers.
If your retiree medical plan is not a stand-alone plan but a part of your active employee plan, all of the coverage mandates of the act will also apply to your retiree population. For example, there will no longer be any lifetime or annual limits on essential health benefits.
The state and private exchanges may offer an affordable avenue for pre-65 retirees to obtain health coverage for themselves and their dependents. So this may be a good time to terminate retiree plans and send retirees to the exchange. This may also, perhaps surprisingly, result in more employees taking early retirement.
Employers may want to provide retirees with a flat dollar amount that can be used to purchase coverage on the private or state-based exchanges.