Jun 14, 2019 - Politics & Policy

HHS gives employers new insurance flexibility

In this image, Alex M. Azar II stands and smiles faintly.

HHS Secretary Alex Azar. Photo: Jessica McGowan/Getty Images

Employers will soon be allowed to use pre-tax dollars to subsidize their employees' individual market coverage, the Trump administration announced Thursday.

What it means: This policy is probably good for employers and bad for taxpayers, according to a Brookings analysis of an earlier draft of the proposal.

  • The policy doesn't ban employers from offloading their sickest workers, though it tries to limit that practice.
  • If businesses do shift the workers with the highest medical bills away from the company-sponsored health plan, that plan's premiums would go down. But the influx of sicker patients into the individual market would drive those premiums up.

The other side: The administration, on the other hand, argues that the rule will enhance competition in the individual market.

The bottom line: The rule also allows employers to contribute to their employees' purchase of short-term plans. These plans appeal to younger, healthier people, which means that older, sicker workers could end up paying higher premiums, according to Brookings.

Go deeper: Not everyone likes their employer health coverage

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