why exiting your group health plan and providing cash may be the right thing
DESCRIPTION
ACA (Obamacare) has unlocked new opportunities for small & medium-sized businesses to save money on health insurance. With these emerging models, both employers and employees can win.TRANSCRIPT
Why exiting your group health plan and providing cash may be the right thing!
Brian Poger, CEO
Hi,
I’m Brian, CEO of Benefitter
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Employers have traditionally offered health insurance for two reasons
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Retain Employee
s
Attract Employees1 2
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Since WWII, employer sponsored insurance has stayed largely the same…
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…even as our world has changed around us
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until now
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The Affordable Care Act (ACA) created two profound market changes that affect how all companies look at health coverage.
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First, it created a market for insurance where anyone, healthy or sick can get covered
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Second, it provided federal subsidies to help about 70% of the population buy insurance
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These subsidies can be
enormous
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A family of four spends on average $16,000 per year on health insurance
Group Health Insurance
$16K
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Subsidized Individual Insurance
$7K
With subsidies, their total cost can be reduced to $7,000 per year, or less.
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But there’s a catch (of course)
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=Group Health Insurance
Employees who qualify for group health insurance cannot access these subsidized plans
Subsidies
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So for employers, the only way to help your workers access subsidies, is to stop offering group insurance
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Counter-intuitive? Yes.
Dropping group coverage is in some cases the only way to “do right” by your employees.
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These rules might make you feel like you’re stuck between a rock and a hard place…
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But we’ve already seen some companies take action.Several Fortune 500s have reduced their benefits and moved employees to the exchange.
By 2025, “fewer than 20 percent of workers …will receive … employer-sponsored health insurance”
- Zeke EmanuelWhy employers will stop offering insuranceMarch 2014
And soon, more may follow….
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Drop Coverag
e?Employee Impact?
Employer Impact?
For the average employer or broker, determining the appropriate course of action is no easy task
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Subsidies are based on income.So by dropping group coverage, some employees will come out ahead, while others will come out behind.
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But savvy employers who recognize this can provide extra compensation to make it fair for all employees.
Extra post-tax
compensation
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To do this right, you must account for:
• Individual market rates
• Plan design
• Post-tax employer contributions
• Government subsidies for exchange plans
• Employer mandate penalties
• Payroll tax
• Other tax effects
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Sound complicated?
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We make it simple
Good news…
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With Benefitter Advisor, brokers can guide their clients to easily compare the costs of group vs individual health insurance.
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We take into account the detailed makeup of an employee population, to predict the net effect of federal subsidies
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We predict the value of subsidies that will be available, based on employee income and household size (using estimates that can be refined)
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And using an employee-lens, we develop an approach to adjusting compensation in a smart, individualized manner
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We’re entering a whole new world of health Benefits. I invite you to learn more by clicking the link below.
Click to learn more
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Brian Poger, [email protected]
www.benefitter.com@benefitterHQ