Companies are weighing the benefits of benefits

Surely, you’ve heard that the federal health law is a big boon for the UN-insured. But what if you’re already covered at work? What does the overhaul matter to you? WHYY takes a look.

Surely, you’ve heard that the federal health law is a big boon for the UN-insured. But what if you’re already covered at work? What does the overhaul matter to you? WHYY takes a look.
(Photo: Flickr/The White House) [audio:100702tework.mp3]

President Obama made us all a big promise in the middle of the health care debate. Remember this?

Obama: If you like your health care plan you can keep your health care plan.

Employee benefits attorney Brian Pinheiro says that familiar sound-bite leaves out one big caveat.

Pinheiro: Your employer may decide as a financial matter, that it’s not worth having a health plan anymore.

Pinheiro is with the Philadelphia law firm Ballard Spahr. He’s writing a “quick-reference guide” to the health law.

He says the overhaul includes tax breaks and penalties to discourage companies from shutting down their benefit plans. Still, individual employers must decide if the carrots are sweet enough or if they’d rather suffer the stick.

Pinheiro: So an employer might be faced with a decision, say in 2014: Do I want to provide coverage, which might run $10-, $15-, $20,000 per employee, or do I want to pay what is currently a $2,000 penalty?

That penalty only applies to larger employers. Small businesses that offer health insurance could get a tax credit.

The most generous refunds go to the smallest companies with lower-wage workers.

At Aztec Printing and Design in Wilmington, co-owner Jeff Durham says about half of the company’s 15 workers get their coverage on the job.

Durham: When we opened up 12, 13 years ago we covered all health care 100 percent, and if I recall a monthly cost for a family may have been two or three hundred dollars a month. It has now – for a family – gone up to almost $1,600 a month.

Several new hires and young workers say they can’t afford the premiums, even though the company chips is a few hundred dollars each month to help.

Durham: We just had to limit it to a certain dollar amount to control our costs. So for the last four or five years, any increase in health care has been absorbed by our employees.

The tax credit was pitched as an incentive to keep small companies in the benefits business. But the tax break is only for employers that cover at least 50 percent of their workers’ health costs.

So, if Aztec ran their numbers today, the company would not qualify.

Co-owner Ed Dwornik says something has to change.

Dwornik: A certain amount of my time has to be spent dealing with the health care system. I have to figure out what the plans are I have to set the policies for my employees. I have to work with the health care provider when things are rejected, I am running the health care system.

At Aztec, health plan costs increase 15 to 20 percent every year. Still, Dwornik says to get skilled workers, he has to offer decent coverage.

Dwornik: We need for them to come in here and work, and if they are worried that their kid is sick, and they don’t know how to pay for it, or they’ve gotten sick, they can’t come in here with a clear head and do their jobs.

By 2014, every state is supposed to establish an insurance exchange to serve as a clearinghouse for state-approved, and affordable, health plans.

Ed Dwornik says he’d consider discontinuing Aztec’s plan and instead offer a subsidy to help co-workers buy coverage through an exchange. Critics worry, though, that the exchanges won’t offer comprehensive coverage.

Benefits attorney Brian Pinheiro says that decision to offer workplace insurance isn’t purely financial.

Pinheiro: Employers kind of face a moral stumbling block, if they drop their coverage, then a lot of individuals are not going to have adequate coverage.

But he says once the insurance exchanges are in place, bosses may worry less that their workers will be left out in the cold.

Pinheiro is expecting intense debates between HR managers, who use health benefits as a recruitment tool, and financial managers tempted to pay the penalty at $2,000 per worker.