Looming employee insurance mandate could be a lose-lose
John O'Connor, editorial director, McKnight's Long-Term Care News
Starting in 2014, businesses with more than 50 employees will be required to provide affordable health insurance to workers who put in at least 30 hours a week. Affected firms that fail to do so will face an annual penalty for every full-time equivalent worker beyond 30 employees. The cost starts at $2,000 a head.
Employers also will have to pay $3,000 toward the healthcare coverage of employees when they opt to offer coverage through a state insurance exchange, should one or more employees not be able to afford that coverage without a tax credit or other government assistance.
Most employers (87%) are likely to continue offering insurance after the new provisions kick in, according to a new survey from Towers Watson & Co. But most say they will need to make plan changes later to avoid a new excise tax on the most costly plans, according to new survey results.
According to benefit experts, employers have several reasons for keeping coverage. Beyond avoiding a possible fee, there are the possible costs employers might face in increasing employees' salaries so they can afford to buy coverage on their own — and the need to stay competitive when it comes to finding and keeping staff.
Speaking Friday at the National Investment Center for the Seniors Housing & Care Industry's annual conference, George Hager said his company will keep its workers covered. The CEO of Genesis Health Care explained that his firm already spends more than $100 million a year on insurance for its 80,000-plus employees. But he views health insurance as an essential benefit.
However, he added that managing such costs in this area will become increasingly important. He pointed out that a better link between accessing care and how it is paid for is needed. He also said health and wellness programs need to play a more central role.
Other firms are still sorting things out. Brookdale Senior Living is typical.
“We're in the early process of analyzing what are going to be some pretty significant cost increases,” said Bill Sheriff, the company's CEO.
Sheriff added that determining whether or not to offer coverage “is going to be a big issue” for Brookdale. His sentiment is probably shared by many senior living operators.
Statistics on how many employers in this field actually offer health insurance for workers are hard to come by. But the general consensus is that larger chains tend to offer it more often, while independents and regional players are often less able to do so.
Here's one safe bet: More employers are going to think long and hard about whether the advantages of offering this benefit outweigh financial penalties and other drawbacks. As things look now, a significant number of operators may conclude that the answer is “no.”
Few senior living operators welcome the prospect of higher costs and fleeing employees. Yet that is exactly the scenario more than a few firms in this field may be facing. As outcomes go, that's a real lose-lose.