ObamaCare's Costs Are Set To Soar As Administration Encourages Companies To Drop Health Benefits Jul 14th 2013, 10:00
People participate in a protest on the second day of oral arguments for the Patient Protection and Affordable Care Act. (Image credit: Getty Images North America via @daylife)
The popular Wegmans grocery chain is cutting health benefits for its part-time employees and plans to send them instead to the ObamaCare exchanges where they may get more generous benefits and subsidies than the company offers.
Several Wegmans employees confirmed part-time health benefits had been cut and said the company said the decision was related to changes brought about by the Affordable Care Act, according to a report in The Buffalo News.
Wegmans is one of thousands of employers likely to make the same decision.
A young family of four that is barely scraping by on $35,000 a year would be at the lower end of the income level of those eligible for subsidies for private health insurance and therefore would receive a relatively large subsidy — $10,742 a year, according to ObamaCare calculators. That would be subtracted from the estimated cost of their $12,130 policy, resulting in $1,388-a-year premiums.
Wegmans did not reveal how much its employees pay for their health benefits now, but their calculations show the premiums they would pay in the exchanges would likely be lower.
Until recently, the company voluntarily offered health insurance to employees who worked 20 hours per week or more. Companies are required by law to offer health insurance only to full-time employees who work 30 hours or more per week.
American Action Forum president Douglas Holtz-Eakin told a Capitol Hill forum on Monday that Obama administration officials have just created "one of the broadest and deepest advertising networks" they could have imagined to spur enrollment in the ObamaCare exchanges.
Employers have unmatched communication channels to explain to their employees why it is advantageous for them to get taxpayer-subsidized coverage from the exchanges instead of through their employers.
"There is an unambiguous incentive now for employers to stop providing health insurance, prepare to pay the penalty, and send their employees to the exchanges instead where they can get much-more-heavily subsidized coverage," Holtz-Eakin said.
The Obama administration announced last week it would delay until 2015 implementation and reporting requirements for the employer mandate. "They now have a year to make the transition" away from employer-provided insurance, especially for their lower-income employees, Holtz-Eakin said. "The Obama administration has just put dropping health coverage on sale for employers."
Holtz-Eakin called the administration's move "deviously brilliant" to simultaneously postpone the employer mandate and also to allow enrollment in the exchanges without verification of income and qualification for employer coverage.
Brian Murphy, a partner at Lawley Benefits Group, an insurance brokerage firm in Buffalo, said part-time employees may benefit from Wegmans' decision, according to The Buffalo News.
"If you have an employee that qualifies for subsidized coverage, they might be better off going with that than a limited part-time benefit," Murphy said.
Under the Affordable Care Act, part-time employees are not eligible for health insurance subsidies if their employer offers insurance.
Scott Foresman Science
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