2014 – Will $141.66 Buy An ObamaCare Approved Health Policy?

Effective in just 12 months and 12 days from now, an employer with 50 full-time employees who does not offer an approved group health plan for their employees will be punished by the federal government if just one of their employees receives a federal subsidy to buy coverage through an exchange.

In the case of paying a penalty, the good news is the first 30 employees don’t count, they are “free” of any penalty. We have no idea why.

Here is an example: ABC Fence Company has 200 employees and decides not to offer an ObamaCare approved health plan. Smith, the janitor working the night shift who is eligible for a government subsidy,finds  his wife is pregnant, so he runs down to the insurance exchange to get pre-existing condition coverage.

Bingo, ABC Fence Company is now subject to a punishment fine.

Here is how the fine is calculated: 200 employees – 30 “freebies” = 170 full time employees X $2000 punishment tax = $ $340,000.

ABC Fence Company has 12 months and 12 days from now to make a decision: Do they provide an approved ObamaCare group health plan or pay the equivalent of $141.66 per employee per month in punishment taxes?

Editor’s Note: Does anyone reading this blog know where ABC Fence Company can get a group ObamaCare approved health plan for an employee monthly cost of $141.66 or less? Despite much of what you read these days, many employers will simply take the least expensive route. Is it time to say goodbye employer sponsored health insurance?

From a TPA:

Yes, from what we have read so far a policy that reimburses at Medicaid rates can comply and meet that target. (http://blog.riskmanagers.us/?p=9769).  Invloves some cherry picking and we need to see how the Rx requirement plays out but on paper we think it will pencil out. Working with some reinsurers now to sell it on a self funded basis.

A lot of low margin high maintenance business. I rather sell very little of it but employers appreciate the solution and give us their normal slightly less low margin administration.

We expect that actual enrollment would be low but by offering the plan the employer avoids the penalty. We think many of these non tax payors will continue to waive and not pay the penalty when they don’t pay federal taxes now.