Originally Posted by bUU
There's never been a penalty for companies not providing retiree health insurance. The biggest change that ACA represents, in that regard, is that it provides a softer landing pad for companies that decide to end retiree health insurance - softer than those retirees would have encountered if ACA wasn't there.
Yes, it will become much easier for employers to just cancel their own plans, hand out a commensurate pile of cash to employees and tell them to buy their own on the exchanges than it is to pull the plug and tell them to navigate the pre-2014 world of individual insurance and no subsidies. Just like with switching from DB pensions to 401K plans, they can shift from funding an unknown future cost into a known future cost, and they like the certainty of the latter.
The difference, again, is that when the employee buys it with employer-provided money, it's taxable to the employee (except to the extent it exceeds 10% of AGI), but when given the direct benefit it's not.