While many are saying "nothing changes" with the Supreme Court decision yesterday, that’s not really true. Now that employers can be confident that subsidized coverage will be available in all states, they can consider how the public exchanges might fit into their strategic planning for their health benefit programs. While very few employers are even considering terminating coverage for all active employees, the public exchanges could offer an alternative to maintaining plans for part-time employees or early retirees.
More than half of all US employers — and 70% of those with at least 500 employees – currently make health coverage available to all or some of their part-time employees, even though, under the ACA, they are not required to offer coverage to employees working fewer than 30 hours per week. Employers generally require part-timers to pay more for coverage than full-time employees (on average, 31% of premium for employee-only coverage, compared to 22% for full-time employees). A part-time employee who is eligible for subsidized coverage through a public exchange might do better, financially, if employer-sponsored coverage was not available. Some employers have already raised the number of hours required for coverage eligibility — the median number of hours required by large employers rose from 21 in 2013 to 24 in 2014 — and more are likely to at least consider this as a result of the King v. Burwell ruling.
The percentage of large employers sponsoring retiree medical plans has fallen by almost half since 1993. In recent years, however, this trend has flattened. Many of the employers still sponsoring a plan feel committed to providing coverage for their retirees, and are aware that the availability of affordable medical coverage affects the age at which employees choose to retire. Among employers offering a plan, the average age at retirement in 2013 was 62 years, compared to 64 among those not offering a plan. For employers still maintaining retiree plans, the public exchange and even off-exchange coverage are possible options for retirees under age 65. Employers need to think about the talent management implications of this.
As the dust storms surrounding the ACA — like the King V. Burwell case — slowly begin to settle, employers can start to survey the changed landscape to see where new opportunities lie. The viability of the public exchanges provides an option for part-time employees and opens a door to those who want to retire early but may have felt beholden to their jobs to maintain medical coverage.