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Check out the latest in healthcare-reform legislation at healthcare.gov. 42 June 2013 | beautystorebusiness.com levels are higher than what is currently being offered in the workplace. That means greater expense in the form of higher premiums. Will employers, as a result, drop health-insurance coverage completely and opt to pay the fine? Ahlrichs thinks some will be tempted. "A lot of CEOs may want to tell their employees, 'I want out of the healthcare business. Go to the exchange and I'll pay the $2,000 fine.'" Employers who decide not to offer the insurance should realize there are additional ramifications, points out Ahlrichs. The first problem is that the $2,000 fine is not tax-deductible. The second problem is that the employees who go to the exchanges find out insurance is not free. "Maybe the premium for a family is $8,000 annually," poses Ahlrichs. "Who pays it? If the employer wants to keep the employees, the employer may want to make them whole and give them the $8,000 needed to pay for their insurance." The story doesn't end there, adds Ahlrichs: The premium payments are now taxable, so paychecks have to be grossed up to around $10,000, in the above example, so the employees can pay premiums out of after-tax dollars. Put it all together and cessation of a health-insurance program can backfire, concludes Ahlrichs. The decision to retain or drop health insurance might depend less on the costs of noncompliance than on what other businesses in the same employment market are doing. No one wants to lose top talent to other employers offering better benefits. As a result, many businesses seem to be playing a waiting game. "We keep hearing statements such as 'We are afraid to be the first one to drop coverage, but we are not afraid of being the second or third,'" says Nowicki. Maybe that's why most employers say they will continue to offer health insurance. "Employers see healthinsurance plans as important tools for employee satisfaction, retention, and