Published December 13, 2012
A few weeks ago, Darden Restaurants announced that they would consider switching many of their employees to part-time in order to avert the cost challenges with providing health benefits to their employees as a result of ObamaCare.
As many employers scramble to face the realities of a drastically evolving paradigm in the health care industry, here are a few warning signs that your employer may be dropping your coverage:
1. Shifting workers to part-time. Instead of paying the penalty, many employers in industries such as retail and food services may find it more advantageous to simply shift workers to part-time and not incur the expenses related to providing health benefits for full-time employees.
Since the penalty for filing to cover workers is relatively small, almost $2,000 per employee per year, which is far below the cost of even a bare-bones health insurance plan, in could make more financial sense for employers to make this move.
With the current rate of unemployment at critical levels, it’s very worrisome that industries that have traditionally been the mainstay of survival may no longer be able to provide full-time employment, as the cost of providing health insurance is a real barrier. After all, it is the individual who works as a cashier at WalMart, or makes French fries at McDonalds, that truly needs insurance coverage, yet these are the same types of individuals who might find it challenging to actually find adequate health insurance.
2. Increasing deductibles. A common trend among major employers has been to shift costs to employees as a means of sharing the financial responsibility, and decreasing the burden borne by the employer. In fact, some employers have gone to full-blown consumer-directed plans that allocate fixed dollars to an individual for their coverage.
The problem with this has been that consumers need to be educated enough to be able to make the right decisions about choosing a doctor, finding the most cost-effective place to get their prescriptions filled, and finding competitive prices for routine services.
As you have probably figured out, this is not easy; and the information is sparse and lacking. But in the end, it may be one means for employers to say they are providing coverage, but still deferring the responsibility to their employees.
3. Penalties for unhealthy behavior. Under the new law, employers have the ability to adjust employee contributions based upon their participation in programs to better manage their health. You may very well end up paying more for health care coverage if you smoke, never exercise and lead an unhealthy life-style.
It will not be unrealistic to believe that employers will soon be watching you more closely to understand how they need to modulate your coverage and costs. On the other hand, there could be clear financial rewards for doing the right thing and engaging a healthy lifestyle, which is not only good for your business, good for your health, but good for the country overall in improving outcomes.
4. The private exchange. Recently, companies like as Sears announced it was implementing a private exchange that would enable employees to select an insurance company of their choice, and enable insurance companies to compete for this business.
In concept, this makes a lot of sense, especially since this is the model that the states, at least some of them, will be following. The challenge is that there is a lot of information that needs to be provided to the consumer to make educated decisions about which insurance plan makes the most sense for them.
As an example, if I have just been diagnosed with diabetes, what insurance plan is best for me to cover the screening and diagnostic services that I will need for my care? These exchanges defer the decisions to consumers, enable employers to remaining somewhat competitive, but whether they really solve the bigger issues of our health care system remains to be seen.
5. Outsourcing your job. For those industries such as manufacturing, it may simply make more sense to move those jobs overseas because your employer cannot continue to pay for the cost of health care coverage, as well as potential disability costs. After all, isn’t this why General Motors was on the verge of collapse? The cost of health care to an automotive manufacturer, or anyone else with a similar demographic, still remains a challenge; and many of the employers within these industries have still not figured out how to remain competitive, keep jobs in the U.S., and still be able to afford providing competitive health care coverage for their workers.
The Congressional Budget Office predicted that 3 million to 5 million people, or less than 2 percent of insureds, may lose their coverage from employers who send them off to the exchanges, and labeled a disruption to the employer insurance market is unlikely. The reality, however; is that when you speak to executives in human resources, they will likely tell you otherwise.
Ironically, the laws provide stronger incentives for employers to drop coverage for their employees and let them figure it out on their own. This, of course, is a scary thought for any individual who enjoys the benefit of health care coverage in the U.S. workforce, and may ultimately be deferred to find coverage in a state-level exchange. With nine months to go the exchanges are far from being operational, and many states will need to declare in the next week their intention to move forward. The warning signs are clear, and consumers could find themselves being pushed off a new cliff – the Health Care cliff.