30% of Employers Likely to Stop Offering Health Insurance in 2014

Workers may have to seek outside health insurance after the health overhaul takes effect in 2014, says a new report released by McKinsey & Co. They found 30 percent of employers are likely to stop offering workers coverage because of the rules associated with reform.

Companies to Back Out Due to Lack of Provision Waiver

The study found that a growing number of employers are seeking waivers from an early provision in the health overhaul that requires them to enrich their benefits for workers this year. The law mandates that employers not cap annual benefit payouts below $750,000 per person, per year.

In order to sidestep the provision, employers have been receiving waivers in droves. By the end of April, the administration had granted 1,372 employers, unions and insurance companies one-year exemptions from the requirement.

Of course, this waiver is very useful to companies now, but it will no longer be available in 2014. As a result, many companies that dont meet the requirements of the provision are expected to either change their offerings or drop coverage options altogether.

1 in 3 Employers Will Definitely or Probably Drop Coverage

According to the McKinsey study, which surveyed 1,300 employers earlier this year, 30 percent said they would definitely or probably stop offering employer coverage in the years after 2014. Among those with a high awareness of the overhaul law, 50 percent said they would likely drop the coverage.

The decision to eliminate coverage in 3 years, along with the issue of the provision, is that many Americans will be given new insurance options outside of the workplace, reducing the moral obligation employers may feel to provide coverage.

Its good to mention that companies with less than 50 employees will be required by law to offer health benefits to every full-time worker or pay a penalty of $2,000 per worker. However, some companies are expected to stop their offerings anyway under the belief they will be better off financially by paying the fines than providing coverage.

The Obama administration has said it is working to encourage employers to retain coverage, but for now, many companies seem prepared to challenge the health care law if it means they have to make major adjustments.

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