NCPA - National Center for Policy Analysis

Small Businesses Weigh Sending Sick Workers to ObamaCare Exchanges

January 9, 2014

Can an employer pay chronically ill workers to leave the company health plan and get insurance somewhere else? That's a question some business owners are asking, now that no one can be turned away from individual health plans under ObamaCare, says BusinessWeek.

  • The potential loophole in the Affordable Care Act could threaten the viability of ObamaCare marketplaces if they get the most expensive-to-insure workers while companies keep healthier employees on their own plans.
  • Some midsized companies that self-insure -- that is, they pay the cost of employees' medical claims directly -- are at least talking about the idea.

While the Employee Retirement Income Security Act law does bar employers from discriminating in how they offer workers benefits, it doesn't address a situation in which an employee and an employer come to an agreement that the worker voluntarily decline coverage in favor of a better deal on the exchanges, subsidized with a cash benefit from the employer. Still it isn't clear whether the practice is truly legal. This, however, hasn't stopped business owners and insurance brokers from pursuing this option.

The Affordable Care Act prompted predictions that many employers would drop coverage entirely and send all their workers to the exchanges. That hasn't happened yet. If companies shift only their sickest employees into marketplace coverage, the practice could damage the marketplaces, which depend on premiums from younger, healthier participants to help cover the costs of older, sicker members.

Source: Karen E. Klein, "Small Businesses Weigh Sending Sick Workers to ObamaCare Exchanges," BusinessWeek, January 7, 2014.


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