Employers should be concerned about the possibility of higher health care costs in 2014. Depending on the industry, some employers may be hit with premium increases and could possibly see penalties. For instance, employers in the hospitality sector such as retail and restaurant industries could see average increases of 60 percent in their health care costs. According to a report last month from the Society of Actuaries, the reasons for these increases are being attributed to the greater use of health care services by individuals who had previously had no coverage, and they further predict that the claims costs could increase by another 32% as early as 2017.
In addition to the rising cost of premiums and claims costs, employers should also be concerned with avoiding possible penalties. The April 8th Business Insurance magazine article “Health Care Costs May Rocket for Some Employers” states that if an employer does not extend coverage to part-time workers who work a 30-hour work week, then they may be charged $2,000 per worker for failing to offer coverage. Also, if an employer passes off the cost of family coverage to an employee, and that charge exceeds 9.5%of the employee’s income, then that employer may also be subject to a $3,000 per worker penalty.
In an effort to control the costs and penalties, some employers are cutting the employees’ hours to less than 30 hours per week. This would make the part-time employee ineligible for employer-sponsored coverage. This approach does have a potential downfall; whittling down employee hours may leave the employer without enough manpower to maintain efficient operation of their business.
Not only are there penalties in place for employer-sponsored health care coverage, but there will be new fees associated with the coverage. For instance, beginning in 2014 employers will be liable for a $63 fee for each person who is enrolled in their health care program.
The first step in understanding these new laws, fees and penalties and the best way to address them is to seek advice from an independent advisor. If you would like to discuss how your organization can mitigate the rising costs of health care or any other risks associated with Human Capital, please feel free to contact me at 732.395.4251 or email@example.com.