This is what Americans have been desperately waiting for. A lot of companies are dropping coverage because the premiums are just not affordable. Most firms may want to provide their employees with health insurance, but the federal law presents them with two options: either provide costly, complete benefits that conform to Obamacare’s cost-growing mandates or do nothing.
A third option offered by the new rule would allow employers to provide their workers with monthly tax-free allowances to help them pay the bills for coverage in the individual market.
Your health insurance spending
The rule can be innovative. Temporarily, it will assist large numbers to acquire coverage. But in the end, it could give individuals, instead of employers, control over their health insurance spending. A change like that would initiate competition in the health insurance market and eventually result in a higher value, better option, and affordable prices.
Funding health insurance is now becoming too costly for many employers. The average premium for a family plan at companies having between 3 and 199 employees has practically increased since the millennium- from $6,500 dollars in 2000 to $19,000 dollars today.
Some companies have reacted by dropping coverage. In 2000, almost all companies with 50 to 99 workers provided insurance. But now, 89% offer coverage.
Whether or not workers at small and medium-sized firms get health benefits, they’re less likely to have many options to select from. Among firms with less than 200 workers that offer coverage, 8 out of 10 provide only just one plan.
This new rule would help change this pattern by reducing restrictions on “health reimbursement arrangements.” HRAs enable employers to reserve a fixed sum of money tax-free every month to compensate workers for healthcare expenditures.
The use of HRAs was seriously restricted during the Obama administration. Firms were prohibited from using HRAs to compensate employees for health plans they had bought by themselves in the individual market.
The new rule will remove of that limitation. The Treasury Department reports that by 2028, 800,000 employers will benefit from the expanded HRA options and thus help over 10 million employees pay for individual health insurance.
The more the competition, the more the options
The growing number of customers in the individual market could lead to more competition and many insurance options.
Take a look at the pizza example. At the moment, some companies are providing pizza- health insurance- for their workers. The employer selects the size and the toppings. If employees demand pepperoni but the employer only offers cheese, they are out of luck. And some companies can’t even afford to offer pizza. So, workers have to pay for it from their own pocket if they need it.
Soon, firms will have the option of offering employee’s money to help them pay for the cost of their health insurance, in this analogy, they will have more toppings to choose from, as well as companies, in this case pizzas.
This is just what will happen in the individual health insurance market. Sending large numbers of new people into the individual market will motivate insurance providers to find means to offer better, more individually customized health plans at lower cost. This will expand with the Trump administration’s other latest changes, which have made a wider range of coverage options accessible to customers such as Association Health Plans and Short-Term Limited Duration plans, which are not available on Obamacare’s exchanges.
The new Trump administration proposed rule would give firms a new means to provide health benefits and make it less difficult for hundreds of thousands of employees to buy coverage that meets their needs and price range.