Despite fines, tax penalties, and other regulatory burdens, nearly 9% of employers surveyed said they intend to end company health insurance for its employees. They plan to end the benefits in 2014 once the health care exchanges, a product of President Obama’s health care reform laws, are up and running.

Most employers indicating they wanted to end the benefit mainly employ low hourly rate employees, and say it would be cheaper to pay the fines and absorb the tax penalties and let their employees get their own insurance on the exchange than to continue to provide the coveted benefit in the face of continuously increasing rates.

This does not bode well for those employees because they are not likely to receive a raise, making up for the deductions they made towards their health insurance plan, resulting in significant savings in overhead and labor costs for the employer. This effectively results in employees being given a pay reduction.

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