Explanation of health care benefits
Play? Or pay? Or both?
Those are critical questions facing business owners as the health care reform discussion unfolds.
Lorin Lacy, health and productivity practice leader and principal at Buck Consultants, said its clients are wondering, and worrying, how mandated coverage will impact both their employees and their bottom line.
"I have had employers ask the question: 'Should I just get out of offering benefits?'"
The answer can vary widely, depending on whether the penalty for not offering benefits follows the House bill or the Senate bill, Mr. Lacy said.
If the House version prevails, the penalty for not "playing" is 8 percent of average payroll -- possibly a very steep price to pay. The Senate version, meanwhile, calls for a $750 penalty per employee, well below the average $4,824 premium for single coverage and $13,374 for family coverage for employer-sponsored health insurance, according to a Kaiser Family Foundation survey.
That could tempt many businesses to opt for dropping benefits and simply paying the penalty.
Then there's a third variable -- employers may offer a health insurance benefit package, but if some employees opt out, business owners may find that they're both playing and paying.
Smaller businesses, generally those with 25 or fewer employees, would not be subject to the employer mandate penalty. But those that are larger, and particularly medium-size businesses, could see significant changes.
"The retail industry will be seriously impacted" under the House version, said Mr. Lacy, particularly if the final version includes part-time workers. "And with the economy, the retail industry is struggling anyway, so this is another problem for them to deal with."
But he also cautions that a passive approach holds its own dangers.
"Some of the early cost modeling we've done with some of our clients shows that, if they do nothing, there can be a pretty big impact."
First Published January 3, 2010 12:00 am