ould begin offering it to some full-time employees. Gains and losses These companies represent only 8% of workers, so the expected gains aren't enough to offset the loss of health insurance coverage by large employers. Susan McIntyre, senior vice president of Market Strategies' health care division, says with the opening of the exchanges in 2014, many small and large firms see an opportunity to walk away from providing coverage without depriving employees of options. The exchanges will serve as marketplaces where individuals and small groups can buy insurance. In 2014, health reform regulations will prohibit insurers from denying coverage or charging higher premiums for people who have pre-existing conditions. The federal government also will provide subsidies for purchasing coverage through health insurance exchanges to people who meet low-income requirements. Motivation to offer health insurance Health reform uses a carrot-and-stick approach to encourage employers to offer health insurance. Small businesses with fewer than 25 workers already can earn tax credits for offering coverage. And in 2014 the government will penalize employers with at least 50 full-time workers if they don't offer affordable health insurance benefits and at least one of their employees qualifies for a premium subsidy. But the penalties are far less than the cost of providing health insurance, fueling concern that many employers will decide to pay instead of play. Even so, the equation isn't so simple. "For employers, it's really not a decision about whether to offer health insurance benefits," says Tracy Watts, a partner at Mercer, a global consulting firm, in its Washington, D.C., office. "Of all the benefits, employees rate health insurance No. 1 most of the time." Benefits are critical for attracting and retaining workers, she says, and employees likely would expect to be compensated for buying individual plans if their companies stopped providing health insurance. "My business runs on my employees," says Valerie Clark, president of Clark & Associates Inc. of Nevada, a benefits-management company based in Reno. "I offer a full benefits package to keep up with demand for high-quality people. If I didn't, most likely my employees would go to my competitors." Focusing on retirement benefits Although most employers don't plan to drop health insurance coverage for workers, many are considering ending their sponsorship of retiree benefits, if they haven't already. Last year, just 25% of large employers offered health plans to retirees under age 65, down from 28% in 2009, according to a national survey by Mercer. Even among the largest employers, just 46% provided coverage to retirees under 65 and 38% provided coverage to those 65 and older. A 2011 survey of large employers by Towers Watson found 26% of employers plan to stop sponsoring health insurance coverage for retirees. That's because the federal government cut the employer tax break to provide retiree drug plans and health reform promises to improve Medicare dru