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Jim Lentini: Employers, employees and health-care reform

Business Commentary

Posted: June 15, 2010 4:55 a.m.
Updated: June 14, 2010 5:15 p.m.
 

In discussion with one of my friends who is a professional small-businessman, evaluating the new Patient Protection and Affordable Care Act, we determined that the current rules will drive people from group plans to individual plans.

Most likely, the plans offered by the exchanges will be created by 2014. Our evaluation after attending a workshop by our broker services company, and hearing experts who have actually read the bill (unlike most of the politicians who passed it), I agree with the assessment as the conditions and rules dictate now.

Also, those employers that must provide benefits or pay a fine will most likely pay the fine, as it will be less expensive than providing health benefits for employees. As the bill is written at this time, the fines are structured this way to make employers drive employees to the government-run programs. Can you imagine going to a government health care enrollment office and standing in line like you do at the Department of Motor Vehicles?

I have never met a small business owner who got into business for the thrill of buying health insurance for the company.

Now, health care reform makes it easy for them to get out of the insuring business, and possibly give every worker a small raise along with the option for the state health insurance exchange.

The choice for the employee is they get to choose their own health plan and some may qualify for premium subsidies. Their coverage is not tied to their employment and they can keep their plan even if they change jobs. Employees don't even need to spend their raise for health insurance, nor are they locked into buying from the exchange.

Once the employer decides not to provide coverage, employees can obtain individual coverage from the exchange, or a private insurance company (should government control allow the current choice options we have).

Employers benefit from no longer having to shop for health insurance for their workers, only for themselves and their families. This will be less stressful, with no more complaints and no more bookkeeping.

Hopefully the existing companies can still provide competitive options as they do now, and this will produce and offer more choice of coverage, convenience of application and better service options and choices than going to a government exchange. (Remember your last time going to the DMV office). Of course, not everyone has to drive, but everyone will
need health insurance.)

Small business owners are not required to purchase group coverage today, but there are good reasons for them to do so, and the new health care law doesn't change why they should. Providing health insurance helps small businesses recruit and retain good employees. Employer contributions to health insurance premiums make coverage more affordable for employees.

The new law in its present form provides subsidies to some workers, but only those earning less than 400 percent of the federal poverty level ($43,320 for an individual and $88,200 for a family of four in 2010). So depending on the employee's salary, sending employees to the individual market will be perceived as a loss to some employees.

Even if employees receive a small raise to help them with buying their own coverage, employees may see the loss of work-based coverage.

There are many other factors to consider, and with the current deficit spending and the increased costs of this universal program, many changes may be coming as the facts and costs will certainly continue to escalate.

As noted by the chief actuary from the Medicare Office of the Actuary in a previous article, there will still be two-thirds of the 32 million uninsured today still not covered by 2019. So the way I read what's happening today and by evaluating the facts and reports read, the costs of health care will go up for everyone, we will create massive numbers of government jobs, taxpayers will incur massive tax increases, we will have less choices and we will not achieve the promise by the president to lower health care costs and cover everyone.

In closing, it is recommended to confer with your broker as the options or lack thereof come about to help you select the best option for your continued coverage and/or limited freedom of choice in maintaining health care for you and your family.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments Inc. His column reflects his own views and not necessarily those of The Signal.

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