Some Employers have the Ideal Employee Population for Exchanges

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The decision to stop offering health insurance to employees is controversial.  Employers seem to be stuck in a game of chicken, everyone is waiting for the first employer to pull the trigger and drop coverage.  Before making this decision an employer should consider whether it has the right employee population for the exchange, as the decision to send employees to a health insurance exchange makes more sense for some employers rather than others.

An employee population with an average age of 45 or higher may actually save money on the exchange, as the rates are subsidized by the young and healthy population paying more for coverage.  Some employers are already sending early retirees to the exchange, as they will also receive coverage subsidized by the young.

An employee population with household incomes up to 400% of the federal poverty line  would also benefit from purchasing coverage on the exchange as they will qualify for a subsidy of up to 9.5% of their income.  Industries like hospitality, restaurant, non-profit, construction, daycare, and nursing homes commonly have these lower income employees.

Additionally, employers will not be subject to the pay or play penalty for 2014 because it was delayed until January 1, 2015.  Thus, an employer could stop offering coverage for employees, and not pay the $2,000 per employee penalty for doing so in 2014.

These are decisions with far-reaching ramifications; however, an employer must always stay ahead of competition.  If the competition takes advantage of one of these cost saving, or takes advantage of the other tax incentives within the law first, you may be playing catch up.