Play or Pay? Pros and Cons

In yesterday’s Advisor, attorney Ashley Gillihan offered critical definitions of Patient Protection and Affordable Care Act (ACA) terms of art. Today, his pros and cons of dropping/maintaining coverage, plus an introduction to the all-things-HR-in-one-place website, HR.BLR.com.

Gillihan is counsel in the Atlanta office of Alston & Bird LLP. His tips came at a recent webinar sponsored by BLR® and HR Hero®.

Reasons for Having Insurance from the Employee’s Perspective:

• Risk mitigation
• Negotiated discounts

Reasons to Get Insurance Through the Employer:

• The income tax/Federal Insurance Contributions Act (FICA) exemption for employer premiums and employee premiums.
• Exchange coverage may not be offered through the employer’s cafeteria plan. Thus, the employee pays for exchange coverage with after-tax dollars. (There are exceptions for tax subsidy employees.)
• The employer may be better equipped to make complex purchasing decisions.
• It may be easier to get coverage through the employer.
• The individual market has higher premiums due to antiselection and individual underwriting/selling costs.
• The employer’s coverage may be better than coverage in the Exchange.

Reasons for Employers to Maintain Coverage:

• Sledgehammer penalty.
• FICA tax savings on employer/employee health plan premiums coupled with employer tax deduction for employer health plan costs may exceed the difference between the sledgehammer penalty and the cost to provide health coverage.
• Increased salary needed if no insurance offered. (“Equalizing” through compensation will cost more than the cost of coverage due to income/employment tax associated with compensation.)
• Business reasons:
• Company cultural imperatives,
• High-value workforce,
• Impact on productivity, and
• Public relations/government relations.

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If Coverage Is Dropped:

• Nondeductible excise tax of $2,000 per full-time equivalent (FTE). (The real cost is higher due to loss of deduction.)
• Pressure to increase taxable wages to pay for exchange coverage.
• Uncertainty as to whether coverage is purchased.
• Exchange risk of higher cost:
• Adverse selection, and
• Mandated benefits.

If Coverage Continues:

• Cost of continuing coverage:
• Costs are deductible.
• Subsidy is variable.
• Potential competitive advantage of offering better/lower cost coverage.
• More freedom over coverage options.
• Potential risk pool advantage.

Healthcare Reform, a never-ending challenge—In HR, if it’s not one thing, it’s another. Like FMLA intermittent leave, overtime hassles, ADA accommodation, and then on top of that, whatever the agencies and courts throw in your way.
You need a go-to resource, and our editors recommend the “everything-HR-in-one website,” HR.BLR.com®. As an example of what you will find, here are some policy recommendations concerning e-mail, excerpted from a sample policy on the website:

Privacy. The director of information services can override any individual password and thus has access to all e-mail messages in order to ensure compliance with company policy. This means that employees do not have an expectation of privacy in their company e-mail or any other information stored or accessed on company computers.

E-mail review. All e-mail is subject to review by management. Your use of the e-mail system grants consent to the review of any of the messages to or from you in the system in printed form or in any other medium.

Solicitation. In line with our general policy, e-mail must not be used to solicit for outside business ventures, personal parties, social meetings, charities, membership in any organization, political causes, religious causes, or other matters not connected to the company’s business.

Find out what the buzz is all about. Take a no-cost look at HR.BLR.com, solve your top problem, and get a complimentary gift.

We should point out that this is just one of hundreds of sample policies on the site. (You’ll also find analyses of laws and issues, job descriptions, and complete training materials for hundreds of HR topics.)

You can examine the entire HR.BLR.com® program free of any cost or commitment. It’s quite remarkable—30 years of accumulated HR knowledge, tools, and skills gathered in one place and accessible at the click of a mouse.

What’s more, we’ll supply a free downloadable copy of our special report, Critical HR Recordkeeping—From Hiring to Termination, just for looking at HR.BLR.com. If you’d like to try it at absolutely no cost or obligation to continue (and get the special report, no matter what you decide), go here.