Lower-paid employees less likely to be enrolled in employer health plans
With open enrollment in full swing, benefit advisers and employers may be missing an opportunity to provide low income employees with appropriate healthcare benefits, according to data collected by healthcare compliance and reporting software provider, Health e(fx).
According to Health e(fx)’s 2017 Insights report, the firm’s first collection of monthly data from compliance requirements mandated by the Affordable Care Act that are audited by the IRS, employers are providing greater benefits to employees than are mandated by the ACA, but lower-paid workers are less likely to be enrolled in such employer healthcare coverage.
In collating data from ACA plan information, payroll data and data from HRIS sources, Health e(fx) found that while “bronze” medical plans are the most popular among employees with income less than 138% of the federal poverty level (an individual worker who earns less than $16,642 a year), only 65% of employees earning this salary choose this health plan option.
The actuarial value for a plan to qualify in the bronze category is 60%, which means the insurance plan will pay for 60% of the medical costs. Bronze plans are also the most popular plan for the hospitality and entertainment industries, according to the data.
“There is a connection between lower pay and low health plan enrollment. Therefore, employers and benefit advisers may be missing opportunities to improve health, productivity, engagement and retention among lower-paid workers,” says Michael Showalter, EVP, sales and marketing for Health e(fx).
The study also found that overall ACA-defined eligibility increased from 2015 to 2016 — from 69% ACA eligible to 74% ACA eligible, respectively — but 88% of employers offer benefits to more employees than required by the ACA.
By looking at ACA figures compared to payroll figures, Health e(fx) found that lower-paid workers are less likely to be eligible and enrolled in employer healthcare coverage, while the inverse is true for higher-paid workers. For example, for those workers who are under 100% FPL, only 13% were eligible and 7% were enrolled; meanwhile those that were over 400% FPL, 95% are eligible and 80% enrolled.
The report found that the 2016 annual employer premium per enrolled employee who is not ACA eligible is $6,883. The study looked at industries ranging from education, food services and restaurants, hospitality and entertainment, retail, medical services and manufacturing. The annual cost of per enrolled retail employee who is not ACA eligible is $6,016 while the cost of health and medical services employees is $8,025.
According to Showalter, this data could have a true impact on their bottom line.
“In a lot of businesses, the lower-paid worker tends to interact with your customer more. They are your face to the customer and you want to use your benefit programs to motivate to individuals helping to keep them healthy, productive and engaged so they can represent your company well,” he says.
He adds, “It's an interesting finding today that we're spending all of this money on health and welfare benefits, but are you serving the people who work with your customers well and how do [executives] think of that in terms of total rewards?”
Showalter says that by combining HRIS, benefits and income data, new insights emerge for benefit advisers and employers.
“The combination of payroll and benefits data provides advisers and employers with insights on how to structure their benefit plan for the open enrollment season. For example, the data help employers answer questions such as, ‘Are my total rewards and operational strategies working as intended?’ or ‘How is income and tenure impacting eligibility and enrollment?’ And, ‘Is it time to consider a pay-based contribution strategy for my workforce?’” he says.