Health Plan Participation Varies by Age

“The ADP Annual Health Benefits Report: 2014 Benchmarks and Trends for Large Organizations” indicates that between 2010 and 2014, the percentage of full-time employees who were eligible for employer-provided health benefits remained relatively steady at an average of 90%. The overall percentage of those participating in health benefits also remained relatively constant at an average of 68%.

However, the report shows distinct trends with regard to age. For example, the average age of the insured work force, along with that of the total work force, increased. A growing number of older employees were eligible and participated in employer-provided health benefits. Among employees between ages 50 and 59, 73% of those eligible participated. In all groups 40 and older, participation was more than 70% in 2014.

These trends are consistent with the overall aging of the work force as Baby Boomers work into their later years, say the authors of the report. Also, as children remain on their parents’ health insurance policy up to age 26, there may be an additional motivation for older parents to participate in their employer-sponsored health insurance.

In comparison, slightly more than half of employees younger than age 30 participated in their employer’s health benefits program in 2014. In this age group, the take rate declined 7.6% between 2010 and 2014.

Also, health plan premiums (defined as employee plus employer contributions) rose for employees of all ages over the period, but the steepest increase was for those age 50 to 59, who saw premiums rise by 16.4%.

Other Findings

In addition to participation rates, the research carried out for the report also revealed a number of other trends relating to health plans and employers, which include:

• Premium increases leveling. In 2014, the average monthly health plan premium was $870, an increase of 15% since 2010. However, after an increase of 6.9% between 2010 and 2011, the rate of increase moderated. Premiums rose 1.7% between 2013 and 2014. The cause of moderating premium costs may have been due, in part, to an increasing number of employers reducing actual coverage value, using high-deductible health plans with higher co-pays, or implementing spending accounts and consumer-directed health plans.

• Costs varying by state. The cost of health plan premiums, as well as premium increases, varies widely from state to state. In 2014, of the 20 states analyzed, New Jersey had the highest monthly premium at $999, while Georgia had the lowest at $807. New York had the largest percentage of employer contributions at 78%. In three states, average premiums actually decreased in the last year.

• Regardless of salary, premium per covered life fairly constant. Employees with higher incomes tend to incur higher premiums, but also cover more dependents. When premiums were adjusted to account for each insured person, rather than merely each employee, premium costs were fairly constant among income levels, averaging $411 per month in 2014.

• Dependents on parent’s plan until age 26. Several trends identified may be linked to the ability of dependents up to age 26 to stay on a parent’s health policy, if the plan offers dependent coverage. Higher premium costs in older age groups may have been linked to the growing likelihood that a covered employee could have covered dependents who may be up to age 26. Among those age 30 and under, the take rate declined -7.6% between 2010 and 2014.

• Employers are contributing slightly less. In 2014, employers contributed 74% of the premium cost for those with dependents. Those with no dependents experienced a 77% employer contribution share. Employer contributions to health premiums declined slightly for all groups from 2010 to 2014, within a tight range of -1.0% with no dependents to -1.5% with dependents.

• Eligibility is mostly flat or increasing. From 2010 to 2014, eligibility remained relatively flat or increased for all groups. The increase in eligibility was highest among those under age 30, at 4.2%. This trend is consistent with a recovering economy, a tightening labor market where employers offer more competitive benefit packages to attract talented employees, and the current legislative environment.

The authors of the report say that in an effort to reduce the risk in their pool of insured workers and possibly reduce costs for everyone, employers may start to extend coverage to those who were not previously eligible. In addition, employers may change the health plan premium tiers or levels of coverage, or they may reduce the employer’s contribution to the coverage of dependents.

Research for the report used anonymous, employee-level yearly panel data from a set of employers spanning 2010 to 2014. All organizations studied had 1,000 or more employees for at least one of the five years and no fewer than 800 in any given year. In addition, the employees were nonunion and full time.

The report is designed to examine the relative impacts of health plan premium dynamics, as well as changes in economic conditions, legislation, and work force demographics. It is intended to provide employers with a recent snapshot and baseline for measuring key trends in the years ahead, allowing organizations to build effective benefits strategies for the future.

The report may be downloaded from here.