Business Savior – Self Insurance & Shifting Sick Workers To Exchanges

Loopholes in the law could enable companies — even those beholden to the employer mandate — to lower their health care cost burden by shifting more expensive-to-insure workers to the individual exchanges. That strategy will create lower health insurance costs for the company health plan.

With health care costs skyrocketing, many business owners are now investigating whether it would be beneficial to pay chronically ill workers to leave the company health plan and purchase insurance through the exchanges created by Obamacare. The key is the self-insurance marketplace.

As the American public has begun to discover, the Affordable Care Act contains various exemptions, surprises, and omissions, and one of its major dispensations is for companies that “self-insure,” meaning they give employees a stipend to purchase their own insurance rather than purchase insurance for those employees.

As Mathematica Policy Research senior fellow Deborah Chollet wrote for a New York Times op-ed in May, self-insured plans do not have to offer the essential health benefits required by the health care reform law, they are exempt from the annual insurance fee that small insurance groups are required to pay, and they do not have to contribute to the state-based risk adjustment pools for insured small groups and individuals.

For those reasons, self-insured plans can be significantly cheaper.