Your employer based health care benefits are going to change. Intentional or not the Affordable Care Act will change your benefits

The great debate about health care reform for millions of Americans with employer based coverage is whether they can keep the coverage they have and like. It is true that there is nothing in the Affordable Care Act that takes employer-based coverage away. However, there is much in the Act and because of the Act that will cause employer based coverage to degenerate and ultimately vanish in its current form.

The most recent factor is the attempt to accommodate religious organizations with regard to contraception. Proposed rule making tries to accommodate insured and self-insured plans but in the process is turning the entire idea of self-insured coverage (and in fact, the very concept of insurance) on its head which may well disrupt the existing process. Here is a link to the proposed rule.

Collectively the new mandates, compliance rules and other requirements are adding additional cost and complexity to employer plans thus providing additional incentive to escape the health care benefit business.

The change in tax status for employer sponsored retiree prescription plans has already caused restructuring of those plans.

The coming health insurance exchanges will provide more employers with the incentive to drop coverage and pay the fine. Even if employers boost earnings to partially compensate for this loss of benefits, future wage costs are far easier to manage than health care costs thus enhancing the incentive.

In addition, there is an initiative starting private exchanges for large employers that has indirectly been advanced the Affordable Care Act. These exchanges will be offered to employers in lieu of operating their own plans. The employer provids a defined amount toward the cost of coverage and the employee selects coverage from among the insurance plans in the exchange. The bottom line is that employees do not get to keep their current coverage in concept or in practice.

Add to this the fact that health care costs are going to continue to increase more than general inflation or wages and you have the perfect storm to undue seventy-five years of employer health benefits. No, it’s not going to happen over night, but within the next ten years your health care coverage will be very different.

Just as with retirement benefits, remember the words “defined contribution.”