Employers' willingness to consider exchanges as an option for part-time workers is a “huge shift,” said Paul Fronstin, a senior research fellow with the Employee Benefit Research Institute. About 4.5 million part-time workers, or 16%, have health benefits through an employer, according to the institute's data.
Some observers say these moves by employers foreshadow a larger shift away from employer-based coverage and toward coverage through the state exchanges. But they could also increase federal costs for premium subsidies targeted to lower- and moderate-income people.
Trader Joe's said part-time workers who no longer receive benefits would receive $500 a year to buy exchange coverage. Many of these part-timers will qualify for federal premium subsidies. “We estimate that over 70% of them will pay less for comparable insurance when they switch to a healthcare exchange plan,” the company said in a statement.
Home Depot's switch will affect 20,000 employees who will continue to receive dental, vision and disability coverage but no longer will be covered by a mini-med health plan, according to Stephen Holmes, a spokesman for the company. “But the new marketplace will offer them more options where they can shop for comprehensive medical coverage,” he said. He declined to say whether the company will increase workers' wages to offset employees' premium cost in the exchanges.
What new consumers can expect in the exchanges is still unclear. An HHS report this week said premiums in the 36 states with federally facilitated exchanges will be about 16% lower on average than anticipated under Congressional Budget Office projections, and exchange consumers in most areas will have multiple plan options from multiple insurance issuers.
But premiums will vary widely from area to area. HHS said that reflects the extent of competition between insurers in particular markets.
It also likely reflects the breadth of health plans' provider networks, said Tammy Tomczyk, a healthcare actuary with Oliver Wyman. Plans with cheaper premiums likely will have more limited networks of doctors and hospitals, she said. But more details won't be available until exchanges open for business.
Also unknown ahead of the exchange launch are the amounts consumers will be asked to pay in coinsurance or deductibles, she said. But the ACA caps annual out-of-pocket costs at $6,350 for individuals and $12,700 for families. Plus, households earning less than 250% of the federal poverty level qualify for cost-sharing subsidies.
Fronstin said employees stand to benefit if they receive subsidies for buying plans on the exchanges that are greater than the tax exclusion they receive for employer health benefits. Workers also are likely to have more plan choices, and they won't be tied to a job for the health benefits. “The public exchanges completely changed the playing field,” he said. “People don't need their employer anymore to get health insurance.”
But over time, workers may pay more for insurance if premium prices accelerate faster than wages, he said. Employers previously absorbed most of the premium increases.
Employers also stand to benefit from the new exchanges in other ways. Some recently laid-off workers may choose exchange plans instead of COBRA. Such workers who are willing to pay the full premium for COBRA coverage often have higher-than-average medical costs, raising health benefit costs for employers, Fronstin said.
The exchanges are expected to be an attractive option for these laid-off workers, who will have more plan options. In addition, they likely will have lower premiums and be eligible for federal premium subsidies. The exchanges offer a continuing source of insurance not available from the former employer, since COBRA benefits last only up to 18 months, said Sara Collins, vice president for healthcare coverage and access at the Commonwealth Fund.
For older workers and those who are struggling with long-term unemployment during the weak economic recovery, the exchanges and new insurance regulations may prove especially helpful, Collins said. ACA rules effective in 2014 prohibit insurers from denying coverage or adjusting premiums based on consumers' health. The law also limits insurers to charging older enrollees three times more than younger enrollees, compared to a much higher differential currently.
Follow Melanie Evans on Twitter: @MHmevans