In recent weeks UPS (United Parcel Service Inc) announced to many of its workers that they will no longer provide health care to employees’ spouses who can obtain health care through other means. The company says that they were motivated to this action by the increasing costs of health care due to the Affordable Care Act. They have said that the costs associated with the law are making it “increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost.”
This change will affect about 15,000 people. UPS will still continue to cover their employees and spouses who cannot get insurance through another employer. Research shows that 35% of companies who cover working spouses will reduce or eliminate this type of insurance to save costs caused by the federal health care laws.
These health care laws and many large companies’ reactions to it are causing interesting rifts with unions. The plan, which was previously supported by most union groups, is coming under scrutiny by the very same people who once pushed for it. Recently the International Longshore and Warehouse Union expressed its displeasure about at least one particular point in the Affordable Care Act.
Companies and employers who previously decided to offer generous health care insurance to their workers will be taxed at a much higher rate than plans that actually cover less. Essentially it is becoming too expensive for companies to provide high quality health care as a benefit for the employees they care about. The Cadillac tax is part of Obamacare that taxes companies at a huge 40% if they offer employees health insurance that covers more than ten thousand dollars per individual.
Employers cannot afford to pay this exorbitant tax, so unfortunately they will likely be cutting insurance benefits for their workers. The International Longshore and Warehouse Union understands that the companies do not want to do this, but will not be able to function under the increased costs. Not wanting to reduce health care, and not wanting the companies to have to close down due to lost profits, this union decided to separate from the AFLCIO which is a larger group of labor unions. Their decision comes because the AFL-CIO supports the Affordable Care Act which now makes it impossible for employers to provide highly beneficial health care to their workers, which is counter to the goals of most unions who strive to increase benefits and pay for their members.
Searching for alternatives to the daunting costs and taxes associated with the new health insurance laws, some companies are turning to combination plans which include health savings accounts. This type of plan gives some degree of control of the money that goes to health care to the beneficiary. It can help with health costs or rising deductibles. Higher deductibles for health care plans are another way companies are attempting to stave off huge costs that could ruin their businesses. Experts say that in the coming weeks and months more and more companies will be reducing health care insurance coverage for their employers in order to save their businesses.