Mercer Finds No Significant Increase In Employee Health Care Enrollment For 2014

Despite the Patient Protection and Affordable Care Act’s (ACA) looming employer shared responsibility (employer mandate) penalties for 2015 and 2016, there has not been a substantial increase in the number of employees enrolling in their employers’ health coverage for 2014, according to recent research from consultant Mercer. The study, Health Reform 2014 Are We There Yet?, only revealed a minimal increase in employer health plan enrollment from 2013 to 2014. Of employees eligible for health coverage, 84.9 percent were enrolled in 2013, and 85.2 percent were enrolled in 2014. Only 85.3 percent were projected to be enrolled in 2015.

“What was most surprising was that we did not see much growth in [employer plan] enrollment,” said Beth Umland, director of research for health and benefits at Mercer, speaking to Kaiser Health News (KHN). “It may just be pushed off until 2015, or employers are finding ways to have a soft landing around enrollment growth.” She also speculated that the penalty for Americans who don’t have coverage—$95 or 1 percent of income this year, whichever is greater—may not be high enough to prompt some workers to enroll in coverage they are offered. In addition, some may not choose to enroll in an employer plan because they have coverage through a spouse or another program.

Perhaps because of the delayed effective date for the shared responsibility penalties, just 58 percent of employers surveyed had extended eligibility for health coverage to all full-time employees (those working 30-plus hours). Twenty percent plan to make changes to comply in 2015.

Industries most affected. Mercer reports that it is the hospitality and higher education industries that had the highest percentage of respondents that must make changes in order to extend coverage to full-time employees. Sixty-five percent of employers in the hospitality industry have to make such changes, and 44 percent are either making changes until 2015 or were waiting, at the time of the survey, until more final regulations are issued before making any changes. Twenty-one percent of hospitality employers surveyed made changes in order to comply in 2014. For the higher education industry, 57 percent of employers have to extend coverage, and 47 percent were either waiting for more final regulations or plan to comply in 2015. Ten percent made changes to comply in 2014. Of all employers surveyed by Mercer, those in the financial sector appeared to be least affected (18 percent), and 11 percent were waiting until 2015 or were waiting for more final regulations to make changes. Seven percent made changes to comply in 2014.

Reassuring to employees might be the finding that most employers surveyed (76 percent) were not planning to make adjustments in their workforce in order to slow the growth in the number of employees eligible for health coverage in 2015. However, 10 percent plan to have fewer full-time employees and 14 percent have made, or by 2015 will have made, some other change to their work force. Of those planning to have fewer full-time employees by 2015, higher education leads the pack (24 percent), followed by retail/wholesale (21 percent) and hospitality (18 percent), with financial services businesses apparently planning the fewest reductions (4 percent).

Spousal coverage. Some employers are considering altering employees’ spousal coverage as a cost-saving measure. Of the employers Mercer surveyed, eight percent had in place for 2014 special provisions making employees’ spouses who had other coverage available ineligible to join the employees’ health plans. Twelve percent instead required a surcharge for spousal coverage in 2014, where a spouse had other coverage available. More employers are considering such moves for 2015, with 11 percent thinking about making spouses with other coverage options ineligible to join employees’ health plans and 16 percent mulling over the addition of a surcharge. Mercer reports that large employers appeared to favor spousal surcharges (17 percent) over exclusions (7 percent). Conversely, employers with fewer than 500 workers were more likely to favor exclusions (7 percent) to surcharges (3 percent).

Employers should know that health benefits have remained an important tool for attracting and retaining employees. According to the Mercer survey, 88 percent of employees agreed in 2008 with the statement: “Getting health benefits through work is just as important to me as getting a salary.” That number rose slightly, to 93 percent in 2013, although it remains to be seen if employer coverage will still be important a few years from now, as individuals become more familiar with health coverage offerings in the health insurance marketplaces. Until then, employers, especially large employers, seem prepared to carry on with health coverage for at least the next five years. Of the large employers surveyed by Mercer, only 7 percent said in 2012 that they were likely or very likely to terminate plans in the next five years. That number dropped to 6 percent for 2013. Small employers, however, seem more likely to terminate plans, with 23 percent expecting to do so in 2012, and 34 percent in 2013.

The survey results were obtained by Mercer from 723 employers in January 2014. For more information, visit http://www.mercer.com.

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