Can an Employer Really Drop Employee Benefits?

It’s no secret employers and employees alike are anxious about the Affordable Care Act (ACA).  Timelines, decision trees, minimum benefit requirements, enough new paper notices to destroy an entire rain forest—you name it, there is quite a bit out there that employers are faced to deal with.  Employees, on the other hand, are getting inundated by political pundits on both sides of the aisle—many speaking half truths and spin.  Employees are wondering what is going to happen to their care—and more importantly, their family’s care.

When Randy Boss of Ottawa-Kent speaks with brokers from around the country, he hears statements of concern (and in some cases fear) of a stampede of employers choosing to cancel their employee benefits—putting them out of a job in the process.   But Randy cautions them to hit brakes before they go off this cliff prematurely.  Why does he feel this way?

“It has to do with the results of many conversations I’ve had with my employer clients about the prospect of just dropping benefits, knowing full well that by doing so they will be facing government penalties, higher taxes, etc.,” says Randy. “As if this was just a finance question of what cost less: providing benefits or dropping benefits.  True, dropping benefits adds to the company bottom line immediately.  But just dropping benefits is not an easy thing to do—that is not real life.  The reason being that employees expect three things from their employers in terms of remuneration: salary, retirement and benefits. If an employer is not cooperative with this compensation “package,” employees quit and go to competitors.  That’s why we have human resources to maintain and manage these three items.”

Randy says it has been my experience that after evaluating the options, employers find it difficult to actually “break” this employee expectation—at least not without having dramatic push back, if not open revolt from their employee population. He writes in more detail on this very subject in the current edition of Health Insurance Underwriter magazine. http://www.mydigitalrendition.com/publication/?i=163835&p=54