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Health Insurance Strategies under the Affordable Care Act

by Tabitha Garvin, MCUN 

Most credit unions in Montana offer health care benefits to their full time employees. With the implementation of the Affordable Care Act (ACA), more people are leaving their jobs because they can now get health insurance without fear of being denied for pre-existing conditions and they can get insurance paid for through the newly offered subsidies. So what does this mean for the employers who previously included health insurance as a key part of their employees’ total compensation?

A few things come to mind.

Most credit unions continue to offer health insurance, wellness programs, life insurance, and work environments that are attractive to employees. Credit unions make the health insurance coverage for their employees very affordable by offering 70% - 100% paid premiums. The credit unions in Montana have banded together to gain some control over their health insurance coverage and costs through the Montana Credit Union League Group Benefit Trust (the Trust), which currently covers almost 500 people and offers five benefit plans to meet various needs and budgets. The Trust also offers a wellness program that has saved users money. When overall health improves and early detection of medical problems occur, it leads to reduced premiums. Participating in the national award-winning Healthy You! Wellness program offers premiums reductions for credit unions meeting annual goals of employee participation.

I have also heard some health insurance consultants speculate that ACA will lead to the demise of workplace health insurance within the next ten years. At this point, it is less expensive for an employer to pay the annual fine ($2,000 per employee if insurance isn't offered and the first 30 full-time employees are exempt) to the IRS than it is to pay the health insurance premiums, which nationally average around $6,000 for individuals and $16,000 for family coverage. When it comes to financial management, it just doesn’t make sense to continue offering insurance when you do this math.

Another issue to consider is how much the employer will pay for annual health insurance premiums. Typically, businesses have paid a percentage of the premiums. Under this new era, it may make more sense to pay a specific dollar amount for each employee’s insurance. As rates continue to rise, employees will need to take on more of the cost, especially if employees continue to be obese, have untreated conditions like high blood pressure and diabetes, or smoke.

One thing is certain: health care costs are going to continue to rise. It is vital that your credit union have a business strategy in mind to deal with the ACA requirements, penalties, and your employees’ ability to stay healthy and productive.

Tabitha Garvin is the VP-Fee Based Services for the Montana Credit Union Network. She would welcome any questions or comments on this material. You can email Tabitha or call her at 800-745-5546, ext. 132..

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