Affordable Care Act: employer can drop plan, save money

My health insurance costs $12,000 a year.  Since the Obamacare penalty is only $2,000, would my employer save money by dropping the plan entirely?

Working For A Living

Dear Working For A Living

Currently, the employer mandate is not in force.  So they could drop your plan today and pay no penalty, saving the whole $12,000.  In fact, that has been the case in the past and will remain so until and unless the employer mandate gets put into effect.

Employers offer health insurance because it’s good for their business.  They have done it for decades without any requirement to do so.  Now that there may be a requirement to offer a plan, why would they stop doing what has been good for their business?

Some experts speculate that employers will drop their plans, putting their employees onto the exchange market.  This may indeed happen if the employer is willing to risk losing his people to other employers who are still offering a group plan.  I think it will take a long time for exchange plans to become competitive with group plans on cost and on benefits.  So, the employer who drops its plan — even if he pays his people more — will not have an attractive package compared to a group plan.

Only time will tell.  I could be dead wrong, but this is my best guess for now.

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Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.