Question: I employ three people at my small company making what I believe is between 200-300% FPL based on what I know about their family situation. I offer them health insurance as part of their compensation (so that the premiums are paid pre-tax) but have decreased their salaries accordingly. Can I just cut-off their health coverage and send them to the exchange subsidies ? (I would propose them a salary increase equal to half the subsidy they’d get from the state, in essence drawing a new subsidy and splitting the benefit between them and myself? Seems almost certain that we would both benefit and thus find the arrangement attractive).
Answer: A few points you should consider; (1) You can stop providing group health insurance. There is no requirement for groups with less than 50 full-time employees to provide health insurance benefits, (2) The employee’s premium assistance (subsidy) is their private concern. If you base their salary increase on their premium assistance you will be infringing on their privacy in requiring them to disclose it to you, (3) Splitting their subsidies with you is a bad idea and may even be illegal.
Let’s be candid. You are not providing any employee benefit now because you have decreased their salaries equal to the cost of the benefits they are receiving . As a result, they do get a a portion of their incomes pre-tax, but we taxpayers are providing that benefit not you. You would be doing them a great favor by dropping your current health plan at the end of the year and replacing the wages you are withholding.