Will Employers End Their Group Medical Plans In 2014?

Recent studies indicate that many are planning to do so! Nearly one of every 10 small to mid-sized employers expects to stop offering health coverage to workers after insurance exchanges begin operating in 2014 as part of President Obama’s health care overhaul, according to a survey by a major benefits consulting firm.  The survey found that one in five companies is unsure about what they will do about group medical coverage for their employees after 2014.  Apparently some small to midsized business owners feel they will be better off dropping health insurance coverage once the exchanges start and just paying the related fines and penalties.
If the survey is correct and business owners in fact terminate their existing group medical plans it could start a trend that chips away at employer-sponsored health coverage in the United States.  Up to this point, employer sponsored plans have been the mainstay of the nation’s health system.
The survey also indicated that the overall majority of employers expect to continue offering employee benefits; even after the exchanges start.  One reason is because if employers actually drop their group medical plans, it could lead to more taxes for both their companies and employees. Since health benefits are not taxed, and companies could be fined for dropping coverage, the penalties and tax ramifications could out way simply maintaining company group medical plans.  Yet another pressing concern for employers is that if they terminate their company sponsored health plans, how will they be perceived by their employees? Terminating such plans would likely be seen by employees as a steep compensation cut if they don’t receive a pay raise in conjunction with the plan’s termination.
For more information on what employee benefit options may be available to your company and its employees, please contact your LL Roberts Group PEO Consultant (toll free) at 877.878.6463.
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