Posted: October 11, 2013
Companies large and small face new choices when it comes to offering workers health insurance. Here's a breakdown.
This is one of several explainers to help consumers navigate their health insurance choices under the Affordable Care Act, or as some call it, Obamacare. Click here for answers to other common questions. Have a question we missed? Send it to firstname.lastname@example.org. We may use it in a future on-air or online segment.
Do employers have to do anything different under the Affordable Care Act?
Not right away. The only thing required of employers at the start is that they notify workers that the new health insurance exchanges have opened. You may have received a letter from your employer to this effect — you probably don't need to do anything.
Starting in 2015, large employers with 50 or more workers have a responsibility — but no mandate — to offer employees health coverage. If they don't, they may face fines, but only if their workers go to health insurance exchanges and have earnings low enough to qualify for federal subsidies. Stores and restaurants — less likely to offer health insurance in the past — may be most affected. The coverage rule doesn't affect workers who put in less than 30 hours a week.
There are no responsibilities for small employers with fewer than 50 workers. If they want to buy coverage for their employees, the insurance exchanges represent a new option for them in terms of where to shop. Certain employers with fewer than 25 workers are eligible for federal tax credits. To qualify, the company has to cover at least half of the premium for all of its employees, and also have average wages of less than $50,000. For details on these tax credits, see this answer sheet from the IRS.
Will my employer cut back on my insurance coverage?
A number of employers have been overhauling the health benefits they offer employees, citing rising costs.
There are two themes to what they are doing. In trying to control their own spending, employers often are shifting health costs to employees. So the average annual deductible for an individual — what consumers pay before insurance kicks in — nearly doubled in the past seven years, from $584 in 2006 to $1,135 this year, according to the Kaiser Family Foundation.
But employers aren't just making workers pay more. They're trying to make them think more about health-related expenses and behavior.
Companies such as grocer Kroger Co. pay only a fixed amount for particular drugs or procedures, giving patients incentive to shop around for the best price. IBM started giving rebates to workers who adopt healthy lifestyles. Penalizing smokers with surcharges is one of the few discriminatory measures the health act allows.
What about part-time workers?
Nothing in the Affordable Care Act says that employers have to cover part-time workers. The law defines part time as someone who works less than 30 hours a week.
Some employers that have offered part-time workers minimal coverage, such as Trader Joe's and Home Depot, have dropped it on the grounds that those workers can now find coverage through the insurance exchanges. Most workers in this situation will be pleased with the outcome. They'll likely find better coverage than what they had for less money. Although depending on the situation, some people may see their premiums go up.
Are employers reducing their workforce as a result of the Affordable Care Act?
There have been reports of employers holding back on hiring in order to stay under the 50-employee threshold that triggers health insurance responsibilities. There also have been reports of employers cutting workers' hours to below 30 per week so that they don't count as full-time. While there is anecdotal evidence of both things happening, there's no evidence that those cases have added up to a broader drag on the economy as a whole.
Will my company stop offering coverage to my spouse and dependents?
Some companies, including UPS, have decided to stop covering working spouses if they have access to coverage at their own jobs. The health law does not require employers to cover spouses, but surveys show that only a minority of companies have implemented a "spousal exclusion."
However, employers increasingly offer incentives to get spouses off their plans. They may charge workers extra if a covered spouse has access to other insurance, or they may pay bonuses when spouses are not on the company policy.
The health law requires employers who offer coverage to employees to also offer coverage to dependent children, or pay a penalty.
Will COBRA rates increase?
COBRA is a transitional arrangement that allows you to stay on a former employer's health insurance for up to 18 months after you've stopped working for them. It's expensive: You pay the entire premium — including any share the employer had previously paid on your behalf — plus a 2 percent administrative fee.
Whether your COBRA rate will go up depends entirely on what happens with your former employer's health insurance plans. If their rates go up, so will yours. You'll likely see a higher increase than your former co-workers, however. That's because their premiums may be subsidized by the employer, whereas yours are not.
Many people who might have used COBRA will find that buying insurance on the exchanges is cheaper. But pay close attention to when the enrollment period for the exchanges are. (Those dates are in our FAQ on the exchanges.) People who enroll in COBRA and later decide they want to switch to an exchange plan generally won't be allowed to do so until the exchange's next annual open enrollment period. An exception would be if they exhaust their COBRA coverage.
See other Frequently Asked Questions on the Affordable Care Act:
Additional coverage from NPR Member Stations:
This FAQ was produced through a collaboration between NPR and Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonpartisan health-care policy research organization. The Kaiser Family Foundation is not affiliated with Kaiser Permanente.
The Affordable Care Act, Explained
Please follow our community discussion rules when composing your comments.