The Role of the Employer in Providing Healthcare Benefits
With the exception of a few states around the country, employers have the option to
determine whether or not they will provide assistance in paying for healthcare costs for
their employees. It may seem like an inconsequential decision, but the impact of employee
benefit programs is many times substantial. In order for firms to make the right decisions
on the types of benefits they will offer their employees, they must evaluate the pros and
cons in detail.
Benefits makeup a critical and substantial percentage of employees overall total reward
packages. Although there are many different types of benefits that are commonly offered,
the most common and widely used are health and welfare benefits. This can include
subsidized or fully paid health insurance costs, the offering of healthcare spending or
savings accounts, or other programs that allow employees to more easily have access to
healthcare. Every employer needs to decide whether or not they will offer these benefits to
employees, and there are many areas that must be evaluated in the process. Sometimes
firms will need to offer benefits in order to stay competitive from a reward standpoint to
other firms. Also, many times firms will offer benefits in order to receive tax breaks on
contributions they pay towards insuring their employees.
Currently, with the exception of Hawaii, employers have the ability to choose whether or
not they will offer healthcare insurance assistance to fulltime employees. In the past other
states such as Massachusetts had laws in place which required employers to pay “fair
share” portions of insurance costs, but those laws have since expired. The Prepaid
Healthcare Act in Hawaii which was passed in 1974 requires employers to pay insurance
costs for all fulltime employees either through an indemnity plan or HMO. Besides
Hawaii, this leads to a large amount of subjectivity that firms can use to determine what
healthcare expenses will be shared with employees.
There is pending legislation that will make changes to how healthcare benefits are
administered in the future. The Patient Protection and Affordable Healthcare Act have
requirements in place for firms that meet certain criteria. Currently the legislation only
covers firms that have greater than or equal to fifty fulltime employees. This mandate will
begin in 2015, and will require that all identified firms offer healthcare assistance to
employees or be subject to an assessment if their employees receive premium tax credits
