Employer-provided health coverage has been the only game in town, but starting in 2014, state insurance exchanges mandated by healthcare reform will provide an alternative, and it may prove attractive to some employers and employees, particularly in low-wage industries.

Coverage from exchanges will come with a federal subsidy for people earning up to 400% of the poverty level. Given that, companies with lower-paid workers could realize substantial savings by eliminating health benefits and instead giving employees money to cover the premiums for coverage from an exchange, says Ed Kaplan, national health practice leader at consultancy Segal. He estimates companies could save despite the $2,000 per employee penalty they would pay for not providing health insurance.

"The federal subsidy amounts for employees in low-wage industries might be a game changer," Kaplan says. Employers are modeling the situation, he says, and "some of them are looking at tens of millions in savings." Eliminating health coverage also lets companies shed a considerable administrative burden, he says.

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