Companies to Continue Health Care Coverage

June 17, 2013 (PLANSPONSOR.com) – When the play-or-pay provision of the Affordable Care Act (ACA) takes effect next year, most companies are opting to play.

Law firm Warner Norcross & Judd recently surveyed human resource professionals and found 97% of the 131 respondents will continue offering health care coverage to employees. In addition, 58% of the companies that will continue with coverage said their insurance plans will not change significantly.

Many HR professionals said their benefits packages make them more desirable employers. Eliminating the benefits packages would affect employee morale and employee wellness.

The survey results showed more than half of respondents (56%) will continue offering coverage with no significant changes to their plans, and 41% will continue offering coverage but with modifications to their plans. In addition, 1% will continue to offer coverage for now but will drop coverage if their competitors do so, and 2% will discontinue coverage for employees and pay the penalties.

The ACA calls for companies with 50 or more full-time-equivalent employees to offer health care coverage or pay a fine that will support subsidies offered through the health insurance marketplace where uninsured people can buy their own coverage. The penalty for failure to offer coverage is $2,000 per full-time employee, though employers may subtract 30 from the total number of employees. Unlike expenses for providing health care coverage to employees, the penalty is nondeductible.

“The bottom line is that employers will continue offering coverage because that’s what they need to do to compete in the labor market,” said Norbert Kugele, a Norcross attorney specializing in health and welfare benefits. “Health care coverage is a good tool for attracting and retaining workers. The ACA doesn’t change that. And employers benefit from this as well, because healthy workers are more productive than unhealthy workers.”

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