Employer Tactics Delay ACA Cost Impact

Employers in states that allowed “grandmothering”—the extension of non-Patient Protection and Affordable Care Act (ACA)-compliant plans—are now seeing proposed health plan rate increases of 11%, on average, according to the 2015 United Benefit Advisors Health Plan Survey.

Many employers, particularly small to mid-size, are still delaying the effects of the ACA by delaying renewal dates. Seventy-three percent of plans in the survey have a renewal date on or after December 1, 65.4% of which were small businesses in the fewer than 100 employee market. Employers in the less than 50 employee market saw a 2.1% increase in renewals after December 1, 2015, compared to 2014. On average, employers this year saw only a modest 2.4% increase in annual health plan cost per employee.

“These delay tactics continue a trend of employers avoiding becoming ACA-compliant, but relief runs out starting next year and permanently ends in late 2017,” warns Carol Taylor, chairwoman of the UBA Client Compliance Solutions Committee and a benefits advisor with D & S Agency, a Virginia-based insurance firm and UBA Partner. “Small employers, in particular, need to stay aware of the costs under a compliant plan heading into 2018 and the potential for exceeding the thresholds for the Cadillac Tax.”                                                      

According to the survey, the average annual health plan cost per employee for all plans in 2015 is $9,736, a 2.4% increase from the previous year; employees picked up $3,333 of that cost, while employers covering the balance of $6,403.

Among all employers surveyed, more than half (53.7%) offer only one health plan choice to employees, and 28.7% offer two choices. As far as plan choices, preferred provider organizations (PPOs) continue to dominate the market (46.8% of plans offered, and 54.8% of employees enrolled), and health maintenance organization (HMO) plans continue to decrease, as they've done since 2012 when they accounted for 19.1% of the market but now account for only 17.3%. Consumer-directed health plans (CDHPs) continue to show the greatest increase in growth, up 10% from 2012 through 2015.

The average premium for all employer-sponsored plans was $509 for single coverage and $1,211 for family coverage. One-fifth (20.6%) of all plans required no employee contribution for single coverage (a 5.1% decrease since 2014), and 7.3% required no contribution for family coverage (a 3.9% decrease since 2014).               

For plans requiring contributions, employees contributed an average of $140 for single coverage and $540 for family coverage, which is only a slight increase from 2014 results—3.7% and 5.5%, respectively.

Most employers (72.5%) define full-time work as 30 hours per week, and 7.6% define it as 40 hours per week. Only 9.9% of employers require fewer than 30 hours per week.

United Benefit Advisors’ 2015 UBA Health Plan Survey report database contains the validated responses of 18,186 health plans, sponsored by 10,804 employers, who cumulatively employ more than two million employees and more than five million total lives. An executive summary of the survey report may be pre-ordered here.