While health benefits at large companies often are among the best in the nation, those companies that "self-insure" also face a new fee on each life they cover. The last of a three-part series by ideatream's Sarah Jane Tribble.
The world of health care, like any, is full of haves and have nots.
At Sherwin-Williams corporate headquarters in downtown Cleveland, it's not hard to spot the difference.
In a workout room at the company's in-house wellness center, an instructor calls out to the class: "And one, you guys all look good…drop down take a child's pose, that's going to feel good…"
Sherwin-Williams employees are encouraged to take a break from their work and hop on an elliptical trainer, run on a treadmill or go to exercise classes at the in-house wellness center.
It's part of Sherwin-Williams' investment in employees for the long-term. Like other "self-insured" employers, it has a strong incentive to keep workers healthy: any health care claims by employees are paid directly by the company. The corporation is betting it'll be better off paying costs out of pocket rather than paying regular premiums to an insurance company.
"The key is to have healthy, engaged, productive, present employees," says Martha Lanning, the company's director of health and wellness plans.
Sherwin-Williams and its employees aren't likely to use the individual marketplace created by the Affordable Care Act, but they will help pay for it.
Lanning points to compliance and administrative cost and then adds: "We also have to pay that transitional reinsurance fee that totals for us, um, with some other aspects of the Affordable Care Act about $4 million in 2014."
The company later told us $4 million isn't quite right, but declined to provide an alternative figure. Corporate spokesman Mike Conway later said it is difficult to specific a cost per year because the company is continuously working to reduce all costs related to federal health reform, including those expenses caused by compliance, administrative and any new taxes and fees.
Sherwin-Williams, like all self-insured companies and insurance firms, must pay the transitional re-insurance fee. In 2014, that's $63 for each employee and for each dependent it insures.
The money goes into a fund for health insurance companies. The fund reimburses carriers for their extra costs in providing coverage to high-risk individuals …something insurers didn't have to do before the 2010 passage of the ACA. The pool of money will be used to ensure insurers can provide coverage available to everyone without regard to pre-existing conditions.
The fee is reduced next year and is set to gradually disappear over the next three years. Mark Hall, a professor of law and public health at Wake Forest University, says it's a sensible solution to a temporary problem.
"The great feature of the Affordable Care Act is it now makes everyone qualify for coverage but that means the first people to sign up or to show up are going to be the folks who need it the most. So we expect, particularly at the outset, that there is going to be a heavy load on the insurance pool of high cost people," Hall says.
But Helen Darling, who heads the D.C.-based National Business Group on Health, fears the fee won't actually go away in three years.
"Once something is in law and somebody's got an idea about a new tax, you're always nervous that that's going to become a way to finance something else and something that is supposed to go away and be sunsetted wouldn't be because they needed the money," Darling says.
For a company like Sherwin-Williams with $10 billion in sales last year and a net income increase of 70 percent over the last three years, the added cost seems modest, at most. In fact, human resource executives at companies nationwide said as much in a recent national survey by Mercer, the consulting company. The survey concluded found 55 percent of executives felt the Affordable Care Act was having no effect on business operations and performance apart from benefits.
And it's a burden employers aren't carrying alone. Mercer also found that most large employers are requiring workers to pay part of the ACA fees.