Affordable Care Act May Give Credit Unions an Edge
Depending on who’s offering an opinion, the Patient Protection and Affordable Care Act, commonly referred to as Obamacare by critics, is poised to either dismantle insurance coverage as we know it or will finally offer services to those who just don’t earn enough to pay for medical services.
John Harris, CEO of CU Insurance & Benefits Alliance, a Salem, Ore.-based CUSO owned by 18 credit unions, was one of the panelists on a session on the health care act signed by President Obama in early 2010 at NACUSO’s annual conference in mid-April. Some of the attendees expressed confusion and frustration on how the new law will impact credit unions.
If a credit union decides to drop its group health coverage, the organization or its employees will have to pay when they seek coverage from a health insurance exchange. If the credit union drops coverage but wishes to keep employees at the same level of compensation, the credit union will need to subsidize employee participation in an exchange. Because of the anticipated inefficiencies of the exchanges, if a credit union wishes to keep employee contributions at the same level after dropping coverage, the credit union may end up paying more than twice the annual cost per employee per year in the future. Due to the greatly increased cost to the credit union, it is highly unlikely many credit unions will adopt this strategy. Because a benefit program remains a vital portion of employee compensation, a credit union that forgoes coverage will be seen as reducing employee wages. These employers would face plummeting employee relations and morale, and would likely experience recruiting and retention issues.
I believe the credit union industry has a terrific human capital story to tell to their employees and members. Credit unions need to show their members and the public that they have the expertise as both a supplier and consumer of health insurance to promote best practices.