Small Employers May Face High Health Care Renewal Rates

Thirty-two percent of all employers postponed their renewal date, according to the 2014 United Benefit Advisors Health Plan Survey. Of this 32%, a vast majority (94%) were small businesses with less than 100 employees. Based on current renewal rates coming in from carriers, in the states that did not allow renewal of pre-Patient Protection and Affordable Care Act (ACA) plans, many small employers are facing rate increases of 30% to 160%, United Benefit Advisors (UBA) finds.

Given that a number of states allowed pre-ACA plans to renew, delaying the effects of health care reform even further, the full impact of the ACA is still largely unknown, UBA notes. “We’re seeing little change in premium rates and employee benefit plans, and that’s because many employers renewed twice in 2013 to delay the effects of ACA,” says Carol Taylor, chairwoman of the UBA Client Compliance Solutions Committee and a benefits adviser with D&S Agency, a Virginia-based insurance firm and UBA Partner. “In the category of employers with 50 or fewer employees, the results are staggering. In 2012, there were 507 employers with a December 1 renewal date. In December 2013, that number was over five times (412.4%) higher, at 2,598 employers. This is going to have a ripple effect for years to come in the small group market.”

While employers have seen modest cost increases in recent years—average annual cost per employee was $9,302 in 2013 versus $9,504 in 2014—employers continue to push more of the burden onto employees through out-of-pocket cost increases and reductions in family benefits, the survey finds.

While average in-network deductibles remained fairly level at $1,901, out-of-pocket maximums (OOP maximums) increased more than 6% in 2014. The median single OOP maximum increased $500 to $3,500 and median family OOP maximum increased $1,000 to $8,000. The increase in medians was more than double the increase in average OOP maximums for both single and family, which both went up less than $250.

The percent of plans with no deductible in-network decreased from 21% for an individual in 2013 to 20% in 2014, and from 22.5% for a family in 2013 to 20.8% in 2014. The number of plans with no out-of-network deductible also decreased from 8% for individuals in 2013 to 6.9% in 2014, and from 9.8% for a family in 2013 to 8.1% in 2014.

Plans with 100% coinsurance are also disappearing rapidly, having decreased by 14.8% since 2012. In 2014, 36.2% of plans offered the coverage for individuals, and only 1.3% covered families at this level.

UBA continues to find there is still a big difference between an employer's cost to insure an employee in the Northeast versus the West. Average annual cost per employee in the Northeast was $10,931, which is 13% higher than the West, at $9,513 per employee. The North Central region comes in second at $10,130, and the Central region pays the least at $8,088 per employee. Employers in the South pay $8,254 per employee.

A copy of the UBA Health Plan Survey may be pre-ordered here.