By Christopher Weaver and Anna Wilde Mathews | The Wall Street Journal
Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.
Benefits advisers and insurance brokers—bucking a commonly held expectation that the law would broadly enrich benefits—are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn’t cover surgery, X-rays or prenatal care at all. Others will be paired with limited packages to cover additional services, for instance, $100 a day for a hospital visit.
Federal officials say this type of plan, in concept, would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing. Employers could still face other penalties they anticipate would be far less costly.
It is unclear how many employers will adopt the strategy, but a handful of companies have signed on and an industry is sprouting around the tactic. More than a dozen brokers and benefit-administrators in 10 states said they were discussing the strategy with their clients.
“There had to be a way out” of the penalty for employers with low-wage workers, said Todd Dorton, a consultant and broker for Gallagher Benefit Services Inc., a unit of Arthur J. Gallagher AJG -0.04% & Co., who has enrolled several employers in the limited plans.
Statement by David Weissman, director of the Rose Law Group Employment Law and Managed Health Care Law Practice: “Like much of the Affordable Care Act (ACA), there are still many unknowns as far as how employers and individuals will respond to the law’s major requirements in 2014. That said, most health insurance plans currently offered by employers meet the ACA’s minimum essential benefits requirements, so there is little reason to believe those employers will dramatically change those plans come 2014.
“As for those employers who do not currently offer insurance but will be required to do so in 2014 or face tax penalties, these “bare-bones” health plans might be a way to comply with the law without incurring significant additional costs. While the coverage in such plans may not be ideal, it is better for employees than having no coverage at all, and there will still be the option for individuals to purchase more comprehensive, subsidized coverage (depending on income level) in the insurance exchanges.
I think the bottom line is that while there is still great uncertainty as to how the law’s mandates will actually play out, there is no doubt that providing health insurance to millions of previously uninsured (and likely unhealthy) Americans will be very expensive, particularly in the short term.
Related: Health law could cause many to see gaps in coverage
