Survey: Employers won't drop health coverage

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Despite all the doom-and-gloom warnings that employers would drop health insurance coverage in response to the health reform law, a new survey shows that most employers still offer health plans.

The survey, conducted by the Midwest Business Group on Health (MBGH), found that only 6 percent of 440 employers in 34 states said they would choose to pay the penalty fee instead of providing coverage, compared to more than 50 percent of employers that said they would drop employee health benefits in 2010, according to the Insurance & Financial Advisor.

"As employers have evaluated their options, the vast majority have determined there is value in continuing to offer coverage in order to retain and recruit talent, as well as to ensure a productive workforce," MBGH CEO Larry Boress said.

A new cost awareness may have driven the steep decline among employers that previously considered cutting their health plan offerings. Large employers said the reform law's cost impact, including extended coverage for adult children up to age 26, was less than 2 percent in 2011. Small- and mid-sized employers said the impact was less than 5 percent, reported the Chicago Tribune.

In fact, employers are finding that the cost of dropping coverage, including a nontax-deductible $2,000 penalty for each employee, could outweigh the benefits. Plus, employers that don't offer health plans likely will have to pay their employees' higher salaries so they can buy coverage through exchanges--a move that leads to higher taxable payroll taxes, Business Insurance reported.

But some employers, particularly small businesses, remain fearful of the reform's potential financial impact. The survey found that many small employers anticipate reform-related costs to increase more than 10 percent in the future, Insurance & Financial Advisor noted.

To learn more:
- read the MBGH survey summary
- see the Insurance & Financial Advisor article
- read the Chicago Tribune article
- check out the Business Insurance article

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