Open enrollment rates for employer-sponsored health plans in 2014 remained flat, but advisers and their employer clients are already putting strategies in place to prepare for expected growth in 2015 enrollments.
Despite the Affordable Care Acts requirement that individuals seek health insurance coverage in 2014 and the fact that employers are already preparing for the health reform laws employer shared responsibility provision, open enrollment levels for employer-sponsored health plans remained mostly unchanged from 2013, new research from Mercer shows. On average, 69.3% of employees enrolled in employer-sponsored health plans in 2014, up only slightly from 69.1% in 2013.
In 2015, researchers expect there will be at least some growth; especially since the individual mandate penalty for obtaining coverage will be higher and more employers will open their plans to newly eligible employees under the ACA shared responsibility rules.
Benefit advisers have already begun to work with employers to put strategies in place to diminish the burden of increased health care costs an enrollment surge could bring.
Managing growth in eligibility
To manage a potential uptick in employees eligible for health coverage in 2015, 10% of employers will decrease the number of employees working 30+ hours per week by next year, the Mercer survey found. Another 14% are making additional adjustments to their workforce strategies.
The survey found retail and hospitality industries, which have a higher proportion of low-wage, part-time workers, are most concerned about higher enrollment in plans. These groups are followed by the higher education sector, in which adjunct professors make up a significant portion of the faculty, yet typically are not eligible for health benefits.
Whats more, employers are concerned about becoming dependent magnets and attracting additional dependents and spouses, as more employees become eligible for coverage and the individual mandate penalty stiffens. About 20% of employers said they would raise the employee contribution for dependent coverage in 2014.
To further curb the number of dependents on their plans in 2015, employers are considering special provisions for employees spouses who have other coverage available. Currently only one-fifth of employers have such a provision in place 12% require a surcharge and 8% exclude spouses with other coverage entirely. However, this practice may gain in popularity as many employers are considering it 16% considering a surcharge and 12% considering a spousal exclusion, the survey found.
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The largest employers are most likely to have a spousal provision in place, but among those with 5,000 or more employees, a spousal surcharge is more than twice as common as exclusion.
Top ACA concerns
Mercers survey found employers biggest concern about the ACA is an increase in administrative burden, according to 78% of employers who cite this as a significant or very significant preoccupation.
Also high on the list of employer concerns is the Cadillac tax, which requires employers to pay a 40% excise if plan cost exceeds $10,200 for individual coverage or $27,500 for family coverage. The tax, which becomes effective in 2018, impacts industries such as higher education, manufacturing, financial services, transportation/communication/utilities, and health care services the most because these sectors tend to offer richer benefits. Still, across the board, 62% of employers say it is a significant or very significant concern.
In anticipation of the 2018 excise tax, employers are making a number of changes to avoid it. The most common step already taken (by 35% of employers surveyed) or being considered (by 47%) is adding or improving wellness programs. Employers consider wellness a long-term cost management strategy and a win-win for both the organization and its employers.
Employers are generating engagement by offering workers meaningful financial incentives to participate or rewarding them for positive health outcomes, such as improving or maintaining a healthy cholesterol level or quitting smoking.
To further curb costs, 41% of employers have implemented a consumer-driven health plan or are considering this action (27%). Those that already have a CDHP are guiding more employees into this option (33%) or are considering it (22%). Many employers also have increased deductibles or other cost-sharing provisions (32%) or are considering it (48%).
Some employers (33%) are considering offering a private health exchange to help them avoid the excise tax, which is a strong level of interest for such a new model. Exchanges give employees the option to choose lower-cost plans, which many do.
Employers committed to offering health coverage
Despite the challenges and changes ahead, most U.S. employers are very committed to providing benefits to their workers. Large employers are least likely to terminate benefits, with only 6% of those with 500 or more employees saying they are likely to terminate and send employees to public exchanges for coverage, down slightly from 7% in 2012.
Employers with fewer than 50 employees, which are the least likely to offer coverage, have expressed growing interest in terminating plans. In 2013, 34% said they were likely to terminate their plans within five years, up from 23% in 2012.
Mercers Health Care Reform Survey was fielded in JanuaryFebruary 2014 for three weeks, with 767 employers responding and included employers of all sizes, industries, and geographic locations in the U.S.
