The Skinny on Skinny Employer Healthcare Plans

Although the Affordable Care Act’s employer mandate has been postponed until 2015, many employers including staffing firms are already considering whether or not to provide health insurance for their employees. Because businesses that choose to ignore the new mandate face stiff new penalties, another middle-ground healthcare plan has been considered by many companies: the skinny plan.

“Skinny” healthcare plans are group plans created to provide coverage solely for non-catastrophic health events, ranging from preventive and routine medical care to wellness benefits. A loophole in the ACA can help employers prevent facing the most extreme penalty of the employer mandate (amounting to $2,000 per full-time employee per year) by providing workers with skinny plans. Staffing firms hope to dodge the penalty by offering skinny plans, and that the acquired savings will amount to more than the total cost of the skinny insurance combined with penalties that are generated by employees who choose not to elect coverage through this plan.

Some employees were surprised that the new healthcare initiative seemed to permit large businesses to offer skinny health insurance plans, which basically covered preventive care and not many other medical expenses. Regardless, once the employer mandate is effective in 2015, there still will be no real ban on skinny plans. Large companies with 50 or more full-time workers will face fines only if the coverage offered by the business is not in accordance with ACA regulations. Currently, the rules in place appear to permit skinny plans, and although there may be an associated penalty, employers may opt to pay it simply because it is less expensive than providing more comprehensive coverage.

Any business that denies the minimum essential coverage to their workers can potentially face a fine amounting to $2,000-per-worker. However, the new healthcare law fails to detail the true definition of minimum essential coverage, as do the corresponding regulations. As a result, many experts share the belief that large companies can protect themselves from facing the $2,000 fine simply by providing employees with a limited plan that only covers preventive care required by the new health law. However, employees would face thousands of dollars in out-of-pocket costs if they are ever hospitalized.

Although many companies have clear economic incentives to provide highly skilled, long-term employees with generous health benefits, the types of businesses that are drawn to offering skinny healthcare plans have a tendency to employ lower-skill workers who only plan to work on a temporary basis. From retailers to restaurant chains, these companies may decide against offering attractive health insurance to their workers because they can easily replenish their workforce due to still-high unemployment rates.

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