We continue our blog series, “Ten strategic considerations of the Supreme Court upholding PPACA,” with a look at the potential implications of the Supreme Court health reform ruling on employer-sponsored insurance coverage.
Employers grapple with new options and plan requirements. Employers need to consider how the employer-sponsored insurance (ESI) model fits in their future. Many employers are intent on maintaining such benefits, recognizing a distinct recruiting and retention mechanism. Reports of ESI’s demise are premature as of this date. Employers will continue to review and amend their plans in efforts to control costs, and there are distinct advantages and cost pressures brought on by PPACA. There may also be new incentives for pursuing a self-funded approach, even by certain small employers. And the law does include some disruptive elements for ESI that bear watching. For example, many feel that the summary of benefits and coverage statements that employers must send to employees are burdensome and won’t be sufficiently useful to employees.
The change to Medicaid expansion could also complicate matters for employers. Under PPACA, employers with over 50 employees may be subject to additional plan affordability penalties for employees under 133% FPL—unless these individuals are Medicaid eligible. If a state does not expand Medicaid, employers above 50 lives may be subject to more plan affordability penalties than they would be were their state to pursue Medicaid expansion. In this sense, a state’s decision to expand Medicaid may have cost implications for employers. How will the anticipated healthplan costs for employers change now that low-income employees may not be able to qualify for Medicaid in certain states?
Learn more about employer-sponsored insurance here.