Major provisions of the 2010 health-care-overhaul law will take effect in January. That’s when employers with 50 or more full-time workers must offer them health insurance or pay penalties. Likewise, individuals must obtain insurance or pay penalties.
Analysts say they expect some employers to stop offering insurance because the penalties will be less expensive. Other employers already are moving to reduce the law’s impact by limiting hiring or reducing some workers’ hours.
The decision by employers to stop offering health insurance to employees as a result of the health-insurance law is far from certain. We do know that the cost of health insurance continues to be the number 1 problem for small-business owners, as it has been for over 25 years. We also know that erosion of employer-sponsored health insurance predates the law, but increased health-insurance costs from the law may exacerbate the erosion.
Health-insurance premiums have increased by over 100% in the past 10 years. During that same time period, the percentage of Americans with employer-sponsored health-insurance coverage has dropped by 10 percentage points.
The law is structured in a way that may make it advantageous for certain employers to drop coverage and advantageous for certain employees to have their coverage dropped.
If the law is unable to contain health-insurance costs or worse increases health-insurance costs significantly, we believe it will lead many employers to stop offering health insurance.
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