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Health Insurance & Affordable Care Act

Some Employers To Offer Low-Benefit 'Skinny' Plans


It works like this: Employers can shield themselves from health law penalties by offering insurance that meets tests for affordability and value -- regardless of whether anybody signs up. At the same time, workers can avoid the ACA's individual penalty by enrolling in a company skinny plan, which qualifies as "minimal essential coverage" for individuals under the health law by the mere fact that it's employer-sponsored.

In practice, employees in low-pay industries often decide that the substantial plan is too expensive even though it meets ACA standards, Fensholt said. (The ACA says coverage is affordable if the employee's contribution is 9.5 percent of household income or less.)

So workers sign up for the skinny plans, which shield them from the individual mandate penalty (the greater of $95 or 1 percent of their income) but offer little coverage.

Even so, at Las Vegas hotels and elsewhere, employees are asking for skinny plans, and employers are offering them to stay competitive, Fensholt said.

"Some of these employers are doing it because their competitors are doing it," he said. "They don't want to lose these employees."

Potentially large medical bills aren't the only disadvantage for workers at companies using the two-tier strategy. By offering an ACA-compliant plan, their employers disqualify them from getting subsidized insurance on or other online exchanges -- even if they don't sign up for a company policy.

The survey also showed a continued move by large companies toward high-deductible, "consumer-directed" health plans and to providing tools for workers to shop around for care. Consumer-directed plans, often paired with a tax-favored health savings account, feature deductibles of thousands of dollars. Deductibles are what consumers pay for care before the insurance kicks in.

Next year, 32 percent of companies surveyed intend to offer a consumer-directed plan and nothing else -- "larger than I would have expected," said Karen Marlo, a vice president at National Business Group on Health. "We were really surprised at how much the survey over and over again pointed the finger at consumerism."

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

Tue, Aug 12 2014

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