“Rather than offer an affordable, minimum value plan at an average cost of $5,500 pepm (industry average), the employer funds only $3,000 in sanctions for only those in need of catastrophic, comprehensive coverage through the state exchange. Risk transfer to taxpayers. This is upside down, but it is what it is. Waving a red flag in front of a bull (Sebelius) may be dangerous. Will the bull win?” – Molly Mulbriar
By Henry Stern
As employers quickly realize that the ObamaTax will not, in fact, be lowering premiums by 3000%, they (and their agents) have begun looking for ways to minimize the impact.
Contrary to popular belief, new ObamaTax plans don’t actually have to be all that benefits-rich. In fact, the Feds themselves agree that a plan which covers basically just the Minimum Essential Benefits “would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing.”
That is, an employer could drop his existing full-coverage (or Catastrophic, for that matter) plan in favor of one of these “bare bones” configurations (Bob, you were way ahead of your time!). Coupled with a supplemental plan to cover some days in the hospital and the like, and the landscape suddenly changes.
This may prove especially attractive for employers with low-wage employees, who want to avoid the ObamaTax employer mandate penalty but can’t afford to offer full-blown coverage. And if the premiums are low enough, perhaps those subsidies will cover the lion’s share of their premiums.
Posted by Henry Stern, LUTCF, CBC at 4:41 PM 0 Comments (Insureblog)
Editor’s Note: In the instant described above, the employer is subject to a $3,000 sanction for each employee who seeks and receives a subsidy through their state exchange. In essence, the employer who embarks upon this strategy is transfering risk to the state exchange and is in effect subsidizing that risk at $3,000 per pool participant (not really since the sanction does not fund the pool). Rather than offer an affordable, minimum value plan at an average cost of $5,500 pepm (industry average), the employer funds only $3,000 for those that need catastrophic, comprehensive coverage through the state exchange, plus, of course, the cost of the group plan offered (bare bones plan). This is upside down, but it is what it is. Waving a red flag in front of a bull (Sebelius) may be dangerous.
– Obama: “Who is selling these low cost / low value plans?”
– Pelosi: “Some insurance advisers and agents”
– Obama: “Can you pass their names over to the IRS and Department of Justice?”
– Pelosi: “already did, they should be drowning in legal fees and paperwork
before the end of the week”
– Obama: “I have no idea what you are talking about”
-For all the critics out there…..how many of you, who obviously aren’t low wage workers, could live with the type of policy these “crafty”employers are providing. They should all be ashamed of themselves. No morerespect for their employees than that.Hopefully the fully enlightened republicans will help solve that problem. Ifnot, then they deserve a single pay govt. plan like Medicare. I’m retired and I don’t know one of my republican friends that doesn’t think Medicare is great.
– Relax, relax. There will be no circumventing Obamacare. There will be no loopholes. HHS employees will write, and re-write, the rules until the program distributes misery equally. No need to change the law, which already gives HHS wide latitude, particularly over its most disloyal subjects.Bureaucrats LOVE this stuff: power to lord over businesses and individuals.
Where profit motivates the private sector, ego motivates the government bureau. The difference is that profit is finite and must be earned; ego is endless.
-This skinny med loop-hole does not exist and if it does, it will be immediately closed.