The Pros And Cons Of Dropping A Group Health Plan

by Holley Maher

Many employers are concerned about the cost and compliance liabilities associated with “Obamacare.” It’s not uncommon to hear an employer say, “I’m going to drop my group health plan and send everyone to healthcare.gov.”  

Yes, dropping the group medical will likely cut cost and alleviate some compliance and administrative duties. In addition, many benefit plans are poorly communicated by employers and viewed as an entitlement by employees, which leads to employees not understanding or appreciating the large contributions employers make to their health plans. So why not drop the group plan?  

Through Section 125 plans, employer-sponsored plans offer significant tax benefits. If the group plan dissolves and the employee is ineligible for Uncle Sam’s premium subsidy, that employee will likely begin searching for a new employer who will provide affordable and tax-favorable benefits. In addition, employers without group health insurance still must comply with new Affordable Care Act laws such as the distribution of exchange notices and 1094-C/1095-C reporting requirements. What are savvy employers doing to manage the cost and compliance concerns associated with the ACA?  

1. Identifying company and employee needs (budget, compliance support, HR, etc.).

2. Interviewing and coordinating a team of  ACA experts (brokers, CPAs, payroll providers).

3. Considering a defined-contribution approach to benefits and providing employees with choices (private exchanges are a tool to manage cost, employee choice, compliance, payroll, bills, etc.).

The best thing to do? Plan in advance. The ACA is here. Don’t wait until the 90-day window before your renewal to develop a plan. n

Holley Maher (hmaher@SmartBenefitsPlus.com) is a partner at Maher, Rosenheim, Comfort & Tabash LLC, specializing in group and individual insurance.