Employers Find Skinny Plans Have Their Attractions

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Employers Find Skinny Plans Have Their Attractions
Calendar25 August 2014

For a while, it seemed that the “mini-med plan” — a fairly common offering by employers with low-wage and part-time populations (such as retail and hospitality businesses) — would be a casualty of the ACA, since the law prohibits the annual dollar limits that were a key feature of these low-cost plans. But other features of the ACA — the employer and individual “shared responsibility” mandates — may be encouraging employers to consider offering a sort of cousin to the mini-med, the so-called “skinny plan.”

Why would an employer choose to do this? An employee can avoid the ACA's individual mandate penalty by enrolling in a company skinny plan, which qualifies as "minimal essential coverage" for individuals under the health law by the mere fact that it's employer-sponsored. The employer won’t disqualify the employee from public exchange subsidies if the skinny plan is the only offer it makes to that employee. And if the employee isn’t full-time, his or her receipt of public exchange subsidies won’t cause the employer to incur shared responsibility assessments.

For full-time employees (those working at least 30 hours per week), a company would also need to offer a plan that is affordable and provides minimum value to avoid shared responsibility assessments. But full-time employees who feel that the company’s standard plan is too expensive (even though it meets ACA standards for affordability) may appreciate the option of enrolling in a skinny plan, which shields them from the individual mandate penalty, even it offers relatively little coverage. While skinny plans vary in design, some cover little more than preventive care.

A survey of members of the National Business Group on Health (generally very large employers) found that 16% will offer their full-time employees a plan in 2015 that doesn’t satisfy one or both of the ACA’s standards for minimum value and affordability, alongside at least one health plan that satisfies both. It may be that some of these employers will offer a skinny plan, but the more likely scenario is that they will offer one or more plan options that would not be considered affordable for all employees.

NBGH members are very large employers, generally with 10,000 employees or more. The larger the employer, the more likely they are to offer multiple plans. In a Mercer survey of more than 700 employers of all sizes conducted earlier this year, we found that 8% of respondents offered a skinny plan in 2014 and an additional 15% were considering it. The employers in retail and hospitality were the most likely to say they were considering offering a skinny plan — 21%. Interestingly, that’s about the same percentage that offered a mini-med plan way back in 2008.

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