Under ObamaCare as it is now written and understood, if an employer with more than 50 employees wants to avoid all punishment, the 60%/9.5% Rule controls. The former addresses “minimum actuarial value” while the later addresses the “affordability” mandate.
Minimum value simply means the health plan offered by the employer should actuarially cover 60% of health care costs. Experts say a plan with a $2,000 deductible, 80/20 and no co-pays qualifies. Other experts say a $3,000 deductible, 60/40 qualifies. Take your pick.
Affordability, as defined by Congress, stipulates that an employer sponsored health plan is affordable if participants pay no more than 9.5% of their gross income towards the cost of coverage.
Some employers may adopt a “100% plan reimbursement strategy” in conjunction with these two mandates by utilizing existing government reimbursement rates, i.e. Medicare. Medicare reimbursement rates are significantly lower than rates through PPO contracts, which typically reimburse hospitals 300% of Medicare and more.
A Plan Sponsor may decide that paying 100% of Medicare is a lot less expensive than paying 300% of Medicare.
Despite punishing ACA mandates employers still retain some degree of control over their profit and losses. The glass is half full.