Companies try to escape ObamaCare penalties

With companies set to face fines next year for not complying with the new mandate to offer health insurance, some are pursuing strategies like enrolling employees in Medicaid to avoid penalties and hold down costs.

The health law’s penalties, which can amount to about $2,000 per employee, were supposed to start this year, but the Obama administration delayed them until 2015, when they take effect for firms that employ at least 100 people.

Now, as employers race to find ways to cover their full-time workers while holding a lid on costs, insurance brokers and benefits administrators are pitching a variety of options, sometimes exploiting wrinkles in the law.

The Medicaid option is drawing particular interest from companies with low-wage workers, brokers say. If an employee qualifies for Medicaid, which is jointly funded by the federal government and the states, the employer pays no penalty for that coverage.

“You’re taking advantage of the law as written,” said Adam Okun, a senior vice president at New York insurance broker Frenkel Benefits LLC.

Locals 8 Restaurant Group LLC, with about 1,000 workers, already offers health coverage, and next year plans to dial back some employees’ premium contributions. That is because an employer can owe penalties if its coverage doesn’t meet the law’s standard for affordability.

But the company, which is based in Hartford, Conn., hopes to reduce its costs by offering eligible employees a chance to enroll in Medicaid, using a contractor called BeneStream Inc. to help them sign up. The government program is more affordable for employees and saves money for Locals 8, said Chief Executive Al Gamble. “The burden gets shifted to Medicaid,” he said.

Click for more from The Wall Street Journal