Employer Coverage to Remain Strong Post Reform

For businesses that employ 81% of workers with health insurance, offering health coverage will continue to make economic sense post health reform, according to a study from the National Institute for Health Care Reform. The study was conducted by University of Minnesota researchers working with the Center for Studying Health System Change (HSC).

Economic incentives to offer coverage will remain strong for many businesses under health reform, especially larger, higher-wage firms. However, incentives will weaken for small and low-wage employers – the very establishments that were most likely to drop coverage because of rising costs.

Post-reform, employer premium contributions remain tax-exempt. Also, beginning in 2014, there will be a penalty on larger employers that do not offer affordable health insurance. There will also be premium tax credits for lower-income people to purchase insurance in new state exchanges if they don’t have access to affordable employer coverage.

After 2014, the largest firms (500 or more workers) will have an average incentive of $2,503 per employee to offer coverage. The smallest firms (fewer than 50 workers) will face a lower average economic incentive of $990 per employee. This is mainly because these smaller employers will be exempt from the penalty for not offering coverage.

There will be economic incentives to offer insurance to workers in many industries. The exceptions are workers in accommodation, food services, entertainment and recreation, agriculture, forestry, fishing because of the greater eligibility of these workers for exchange subsidies. Employers with a union presence will have a large economic incentive to offer coverage after 2014. For more information, visithttp://www.nihcr.org.

Last Updated 9/8/2017

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