At Work

Employers no longer required to automatically enroll workers in health insurance 

If you work for an employer that provides health insurance, why wouldn’t you enroll? Well, you may not want to pay the premiums, you may have coverage through your spouse or even another employer or as a retiree from a previous employer… or as all too often the case, you simply don’t pay attention to the enrollment information you are provided.

Note the paragraph highlighted below. The CBO’s predictions regarding health care have not been too good lately. If they base their predictions on the assumptions stated below there is no wonder they are way off. First, there are so many exceptions not many people will ever pay the penalty and second just because a new hire or two or more does not enroll in health benefits, no employer this side of the Atlantic will increase cash compensation. 

Up until October 28 employers with more than 200 full-time employees were required to automatically enroll new, full-time workers in one of the employer’s health insurance plans, from which they could opt out. The Department of Labor said it would issue regulations to implement the requirement by the end of 2014 — but failed to do so.

As a result of the budget deal, Speaker John Boehner celebrated the elimination of the automatic enrollment provision, describing it as repealing “another major piece of Obamacare.”

But hold the applause. The Congressional Budget Office projects that as a result of repeal, 750,000 Americans will end up without employment-based health insurance in most years after 2018. Of those, CBO projects that fully 90 percent will remain uninsured. That’s a lot of people.

CBO also expects the repeal to decrease the federal deficit: More people will be paying penalties for not having health insurance, and employee compensation will shift from nontaxable health benefits to taxable wages. Sure, deficit reduction is great, but is it really worth celebrating those consequences?

Excerpts; Bloomberg View 10-29-15

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Categories: At Work, Government, Healthcare

3 replies »

  1. You confirm, and I agree, that no one will be increasing wages. But, what you miss is that if the mandate were carried out, including automatic enrollment, we will see added costs … and in turn, employers will offset those new, added costs from more people being covered, by reducing wage increases – doing what they have consistently done since 1991 – reshaping the slices of the pie to spend less on direct compensation and more on health coverage. So, yes, repeal of automatic enrollment for health coverage will, in fact, reduce the deficit/debt.

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    • Do you really see the number of people who have employer coverage available and who don’t enroll and have no other coverage as significant?

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      • What I see is ever increasing health care coverage costs, and a game of musical chairs – where employers who maintain their existing plans and coverage end up with a higher percentage of eligible workers enrolled in the plan, and a higher percentage of eligible spouses and eligible children enrolled in the plan. We already saw that with children up to age 26.

        When health coverage takes an ever increasing bite out of the total rewards pie, you end up with less taxable wages, and a hit to the deficit.

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