The “Magical Mathematical Pencil” Method Of Solving Health Care

Employees Earn $4,128 Pay Raise Plus Free or Almost Free Health Insurance……..

Mueller Manufacturing Company decided there was a better way to provide their 300 employees with free or almost free health insurance while gifting them a raise at the same time.

A magical mathematical pencil solved the riddle of rising health care costs, reduced wages and hiring freezes each health insurance renewal.

In 2023 the ACA penalty for large employer groups not offering health insurance increased to $2,880 per employee, less the first 30 employees. Since, in Mueller’s case, this penalty applies to 300-30=270 employees, the penalty amounts to $777,600 for the year. That comes out to $2,592 pepy.

Mueller Manufacturing was paying $560 pepm for the company’s health plan. That comes out to $2,016,000 per year.

Company executives realized they could save $1,238,400 by dropping their company health plan. Instead they decided they would pass on this new found savings to their employees, giving each a $4,128 annual pay raise they deserved.

Company executives understood their employees could obtain health insurance on their own, with all pre-existing conditions covered, through individual policies. All employees, they knew, would qualify for federal subsidies providing free or almost free health insurance.

A review of FPL guidelines showed company officials there was a more affordable method in providing for the health care needs of their valued employees while giving them a raise at the same time.

Uncle Sam is gifting ACA subsidies to individuals and families with net incomes between 100 percent and 400 percent of the Federal Poverty Level (FPL). The American Rescue Plan Act (ARPA) has extended these tax credits to individuals with incomes above 400 percent of the FPL and made the subsidy more generous for those below 400 percent.

In 2020, 87% of the 10.7 million people who purchased health insurance on the Marketplace received ACA premium subsidies, the Centers for Medicare & Medicaid (CMS) has reported.

Smart employers have found there are many methods to solving health care. Direct primary care solutions, Cash Pay Centric Health Plans, narrow networks, wellness programs (that never work), specialty drug risk transfer, IRC 501r are some of the strategies emerging in the marketplace.

Now there is the “Magical Mathematical Pencil” method to controlling health care costs for cash strapped employers.