Taking a look at the escalating premium amounts for health insurance plans, a lot of employers got a bright idea: “I don’t
want to mess with group insurance anymore, it’s a pain. I think I’ll just give my employees a stipend and let them go into the marketplace and buy their own insurance.” At first, they thought, they would do it with pre-tax dollars like health savings plans, until the IRS put the kibosh on that. Then, they thought “Okay fine, post-tax dollars.” But on November 6, the IRS, the Department of Labor and the Department of Health and Human Services put the kibosh on that, too.
So in case yours was one of the companies thinking of ditching group insurance to send employees out into the healthcare marketplace, think again. Any company that offers money or reimburses employees for insurance is, in essence, setting up a group insurance plan, the regulatory agencies said. And that’s a no no. It seems like an easy solution. Everybody gets to pick the plan that makes him happiest and the company doesn’t have to deal with the headaches of managing a group health plan which—let’s face it—can be a hassle. Employees may differ as to what kinds of benefits they value. They may differ regarding what kinds of co-pays and deductibles they want to pay. And there’s all the paperwork.
If you don’t have to provide insurance—and companies with fewer than 50 employees don’t—it’s understandable you would want to avoid it. On the other hand, what you pay for health care as part of a strong benefits package isn’t nearly as costly as what you might lose by not having one, such as really talented, committed employees who move the needle for your organization.
Traditionally, candidates with families or health issues have asked about medical coverage during the recruitment process. These days, a lot of young people entering the work force are asking. It used to be that young, healthy people paid nearly nothing for health insurance. Or went without it. But the Affordable Care Act, in an effort to spread the risk out so that older people and those with pre-existing conditions can afford coverage, has increased the cost of insurance for younger people. And coverage is mandated or individuals pay a tax penalty. Now they’re interested in jobs that have great benefits packages. The companies that offer those may have a serious leg up in terms of not only recruiting but also retaining talent, over those that don’t.
A good benefits broker can help you figure out the best plan that works with the size of your company and your budget.
So, if you have a health insurance plan for employees that’s part of your benefits package, now may not the time to get rid of it. You can’t provide a stipend and tell them to go buy their own. Check out the official language here – http://www.dol.gov/ebsa/faqs/faq-aca22.html
We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business. Contact me at Caroline@valentinehr.com or call (512) 420-8267.