A tiny fraction of large employers say they are likely to terminate their workers' healthcare coverage in 2014, when the state-based insurance exchanges become operational, according to a survey by Mercer, a consulting firm.
Few employers plan to drop coverage: survey
Just 6% of employers with 500 or more workers said they plan to drop coverage and allow workers to purchase individual policies through exchanges. Only 3% of businesses with 10,000 or more employees said they would stop offering health benefits.
Among smaller employers—those with 10 to 499 workers—20% said they would likely drop health plans in 2014, especially businesses with low-wage workers and high turnover. But Mercer consultants cautioned that this might not pan out, citing health reform in Massachusetts, where large losses in employment-based coverage haven't materialized.
Starting in 2014, employers can either offer coverage to workers or pay a penalty. The penalty itself is far less than the cost of coverage. But when factoring in taxes and the need to have healthy workers, many employers don't seem to think the trade-off is worth it, according to the survey of 2,800 employers.
“Employers are reluctant to lose control over a key employee benefit,” said Tracy Watts, partner at Mercer in Washington. “But beyond that, once you consider the penalty, the loss of tax savings and grossing up employee income so they can purchase comparable coverage through an exchange, for many employers dropping coverage may not equate to savings.”
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