Do You Still Need to Offer Health Benefits?

Do You Still Need to Offer Health Benefits? Posted by Rick Wald on July 10, 2012

If your organization is like most, you offer health benefits to your employees—it has simply been what employers do and what employees expect. But with the advent of health care reform, “what you’ve always done” in terms of health benefits may not be necessary or even preferable. Let’s look at what’s changed.

First, the answer to the question “Why do you offer health benefits? has traditionally been, “Because we have to.” It has long been part of the “social contract” between employers and employees and an acknowledgement of the fact that, if employers didn’t offer health insurance, employees may not have been able to purchase it on the open market, or if they could, it would likely be egregiously expensive. Now, with the creation of public health insurance exchanges slated for 2014, those reasons may no longer be valid. Instead, companies have a new question to ponder: Should we pay or play?

“Pay” refers to the option for employers to opt out of offering health insurance and instead rely on exchanges to offer insurance to employees while they pay a $2000 penalty per employee. While the cash penalty may seem attractive compared to the cost of offering health benefits, employers must also consider the potential negative effects, particularly on the three R’s: recruitment, retention, reputation.

“Play” means continuing to offer coverage for your employees. But it likely doesn’t mean keeping the status quo. There are many new factors to consider, with broad workforce and organizational impacts ranging from how you classify employees to whether you should use an exchange to how you’ll manage the associated compliance and control implications.

In Old soil, new seeds: HR’s growing role in delivering health reform, we explore the ways health reform has fundamentally shifted how companies approach health benefits. Do you still need to offer them? Maybe. Maybe not. The decisions are much more strategic now. And so is the opportunity for HR leaders to shine by owning the issue and helping to guide their fellow executives in making informed decisions that serve the company’s long-term interests.


Rick Wald Rick Wald is the national practice leader for Deloitte Consulting’s employer health reform strategy practice and the employer health care consulting practice. He is a frequent speaker on the strategic implications of health care reform.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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