The Affordable Care Act’s employer mandate may have been delayed by a year, but come 2015, staffing firms will have had to decide whether to offer insurance or pay the penalties. For the moment, at least, there’s a middle-ground option that many staffing firms are considering, the so-called “skinny” plan.
A skinny plan is a group health plan designed to cover only non-catastrophic health exposures like wellness benefits, preventive care and certain routine medical care. A loophole in the Affordable Care Act allows employers to avoid the heaviest “employer mandate” penalty of $2,000 per full-time employee per year by offering such plans. Staffing firms planning to offer skinny plans hope that the savings from avoiding the “no offer” penalty will outweigh the combined cost of the skinny insurance and penalties generated by employees who reject the skinny insurance and obtain subsidized coverage from state exchanges. The former penalty applies to ALL full-time equivalents beyond the first 30 employees. The latter penalty is assessed per worker who seeks subsidized coverage.
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Before ACA, employers would not have portrayed the benefits of skinny plans as health insurance; they would have called them wellness benefits. Most employees aren’t very knowledgeable about health insurance. Few of them will understand what a skinny plan is or, more important, what it is not. Such plans will certainly not be called “skinny” but will more likely be called “Minimum Essential Coverage” plans. That phrase, taken from the ACA statute, certainly sounds like comprehensive coverage, aggravating the employee’s perception problem.
As such, skinny plans come with inherent risk, which I’ll discuss next week in part 2.
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