Play-or-Pay Health Care?

Health care strategizing is taking on new dimensions due to the Patient Protection and Affordable Care Act that was signed into law in March of 2010. Employers are facing tough and complex decisions and must decide before state health insurance exchanges are up and running in 2014.

By 2014, employers could suffer from a range of taxes and penalties based upon the level of coverage they are providing to employees, forcing employers to decide if they want to play or pay.

Health care benefits will have a profound impact on talent acquisition and employee retention strategies, the culture of the organization and the employers’ competitiveness. Employers will have to analyze different approaches to minimize the impact on their company.

One option for employers is to make benefits less rich in order to maintain the total value under the threshold for excise tax. Another choice for employers is deciding to make minimal, if any, increases in their employees’ share of health care costs thereby keeping their plans in “grandfather” status or significantly raising the employee cost sharing and losing the “grandfather” status.

By maintaining “grandfather” status, employers could avoid certain health care reform mandates. According to a Mercer Study, only 53 percent of employers who responded are likely to keep their “grandfather” status for all of their plans.

For 90 to 95 percent of companies, the play-or-pay choice consists of complex mathematical debating to decide if offering health benefits is less expensive than the taxes and penalties.

Every employer must start working through the issue today, in order to be prepared when the Patient Protection and Affordable Care Act goes into full effect.