Hiring: Facing the Challenges Posed by the Individual Mandate

Although many companies have dropped or significantly cut back employer-sponsored benefits in response to a difficult economy, they may soon discover that they have lost much of their competitive advantage for hiring and retaining key talent. Benefits have historically been a major attraction for talent (consistently ranked as “highly important” to employees) and will very likely continue to be a major competitive advantage for hiring and retaining key talent.

Offering health benefits will, if anything, speak more loudly and be much more meaningful to employees under the new requirements of healthcare reform, most notably the individual mandate.

The problem

By 2014, employees who are not offered group insurance by their employers will still be under an individual mandate to be insured, meaning they will have to purchase insurance through an exchange or face an individual penalty. In other words, employees will have to use their take-home, after-tax pay to purchase health insurance or pay penalties if not offered coverage from their employers.

The solution

Consumer-driven healthcare options (high-deductible health plans with a health savings account, or HSA) are a win-win for employers and employees. Besides being less costly, HSAs have consistently shifted healthcare behavior by putting consumers, or employees, in the driver’s seat. HSA participants are more likely to set aside money for potential medical costs, get second opinions for medical procedures, shop for lower prescription drugs, and altogether engage in healthier lifestyle choices; all of which help reduce health plan costs over the long-term. Moreover, the majority of participants admit that controlling their own health costs is extremely important to them, contributing to their overall satisfaction.

If you do not choose to offer any healthcare coverage options, you can still provide an Outside Health Premium Flexible Spending Account. This option enables employees to set aside a portion of their paycheck, pre-tax, for premium expenses. After paying premiums, the employee then submits for reimbursement from the account, in effect paying for premium expenses with pre-tax dollars.

For assistance or more information, please contact us.

Posted in: HRvest
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