Under ObamaCare, employer groups of more than 50 employees must “pay or play” in 2014.
If they dont “play” and just one employee uses a government subsidy to purchase insurance through an exchange, the employer is punished to the tune of $2,000 per employee.
But what does it take to “play” to avoid the penalty. An employer must offer a benefit plan that meets the minimum requirements under ObamaCare. Offering a plan does not require employees to participate.
As we understand the law, the minimum plan is one that offers a 60% actuarial value. Put simply, a plan that pays 60% of overall eligible medical expenses. Since 20% of any given population drives 80% of the claims, a deductible of $2000 or more may be permitted.
Prescription drugs can be limited to a select number per therapueatic class, excluding all others.
And, most importantly, no where in the 2,700 pages of ObamaCare does it clearly outline the benchmark upon which claims are to be based. Paying 60% of Medicaid or Medicare rates would make perfect sense since both Medicaid and Medicare are government programs and ObamaCare rules are government mandated.
How can the government have any problem with an employer paying group medical benefits based on government reimbursement rating methodologies?
Paying 60% of Medicaid, limited number of coverage prescription drugs will limit a plan’s risk exposure well below today’s typical group medical plan benefits. We estimate that costs will decrease by 65% or more using this medical plan prototype.
Under ObamaCare an approved plan must be affordable. That means the cost to the plan participant cannot exceed 9.5% of gross income. An employer may charge participants 9.5% of their gross income in order to join the group’s medical plan. This may effectively eliminate most employees from joining the plan, thus saving the employer the expense and risk associated with plan membership.
How many minimum wage workers, working 40 hours a week, will agree to pay $119.38 per month for group medical insurance when they can join a pre-existing condition health plan through an exchange at any time, with government subsidies to pay part or all of their cost of joining the exchange? Many will know how to work the system. “Hey Joe, why pay $119.38 per month when all you have to do when Sally gets pregnant again is to run down to the local exchange and sign up for pre-existing condition coverage?”
If employers implement the minimum value plan and charge participants the maximum allowed by law, we believe that many employees would not join, thus saving the mployer money as well as effectively avoiding ObamaCare punishment taxes.
A dual option plan could be implemented whereby participants could enroll in a more comprehensive plan leaving the Baracka Claus crowd standing in line at the exchange.
Editor’s Note: See previous posting: http://blog.riskmanagers.us/?p=10076