ACA Will Most Likely Have Positive Impact On Employees’ Health Coverage

Most employees who have employer-sponsored health coverage now will probably continue to be covered by their employers, according to a recent report from the AARP that analyzes the Patient Protection and Affordable Care Act’s (ACA’s) effect on health coverage for 50 to 64-year-olds. The report found that, of the 39 million insured adults age 50 to 64, 75 percent had employer-provided coverage. Seventy-four percent of those with employer-provided coverage were covered by their own employer, and 26 percent were dependents covered by a family member’s plan.

The AARP report pointed to facets of the ACA that encourage coverage of employee health insurance on the part of employers, including the shared responsibility requirement, under which employers will be penalized if they fail to offer affordable health benefits meeting minimum value standards to full-time employees or if a full-time employee receives subsidized health coverage through the ACA marketplace. The ACA also provides incentive for small employers to provide coverage with the Small Business Health Options Program (SHOP) and its associated tax credit for certain small employers with low-wage workers, AARP noted.

The ACA also encourages workers to take advantage of the employers’ plans, AARP continued, by making them eligible for premium subsidies only if their employer-provided coverage is not affordable or does not meet minimum value standards and by providing that large employers will be automatically renewing current employees’ coverage and enrolling new employees. The Department of Labor is expected to issue regulations on this later in 2014.

AARP concedes that there is a possibility that the ACA’s effects on employer health coverage of older workers may be mixed. There is a possibility, according to some analysts, AARP said, that some employers will cease to hire full-time workers or reduce workers’ hours in order to keep the number of their full-time employees under 50 and thereby avoid the ACA’s shared responsibility requirement. Also, because the penalty for not offering health insurance may be lower than the cost of providing it, some insurers may discontinue their workers’ coverage (even though the same employers offered insurance prior to the implementation of any penalty). This could actually benefit workers, AARP theorizes, because they might find lower-cost coverage on the ACA-created health insurance marketplace, especially if they qualify for subsidies. On a more positive note, AARP proposes that more small businesses may have incentive to offer health coverage in order to receive the tax credit.

Not surprisingly, coverage correlated with employer size. Eighty-seven percent of those who worked for employers with 100 or more employees received employer health coverage and 61 percent of those working for employers with less than 50 employees had coverage. Among the self-employed, only 48 percent of those ages 50 to 64 had coverage provided by their place of employment.

Furthermore, of the 25 percent of workers in the same age category who did not have employer coverage, 55 percent were uninsured, 28 percent had other private health insurance, and 10 percent were on Medicaid.

The AARP analysis, Effect of Health Reform for 50- to 64-Year-Olds, was based on the U.S. Census Bureau’s March 2013 Current Population Survey. For more information, visit http://www.aarp.org.

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