Dive Brief:
- The movement of employees from employer-provided health plans to the public exchanges is picking up speed as more businesses start canceling their health plans, finding that it is often more valuable to employees to lose them--especially if they can receive higher compensation instead, and get assistance purchasing a plan on the exchange.
- This applies most to businesses that have a large percentage of employees earning well below $60,000, because families with incomes below that amount qualify for large subsidies on the public exchange. At the same time, the employers can save the cost of providing health benefits, which can add 20% to 50% to their costs for employees at the low end of the pay scale.
- The employer can use their savings to cover the cost of any additional compensation to their employees and to cover any employer-mandate fines. Even after those expenses, many employers can realistically expect to save 30% or more of the cost of maintaining an employee health plan.
Dive Insight:
While few of these transitions occurred in 2014, as Forbes notes, it's just a matter of time. The public exchanges were new last year and the employer mandate fines were not yet in effect, but now we can expect to see more movement.
Look out for start-ups such as Benefitter, which helps companies ease their employees to the public exchanges. For employers whose employees are largely at the low end of the pay scale, dropping ESHI simply makes sense, and for some employees, like those with families and earning $35,000 or under, it's far better to be eligible to buy subsidized insurance on the public exchange.