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By Howard Perlman
Provisions of the Affordable Care Act prompted in 2014 widespread reconsideration of benefits offerings, epitomized by 59 percent of employers adjusting employees' health coverage options last year, according to survey results released March 24 by the Society for Human Resource Management.
Many employers adjusted plan offerings after considering the cost implications of the ACA's shared-responsibility mandate for employers, the upcoming excise tax on high-cost employer-sponsored health plans, additional costs of compliance with reporting offerings of health coverage and other aspects of the ACA that can affect employers' costs.
From January 2014 to January 2015, 41 percent of employers modified health plans, 20 percent of employers added health plans and 11 percent of employers ceased offering certain health plans, said the results of SHRM's “Health Care Reform—2015 Update” survey. Fourteen percent of employers switched health-care providers during this period, the survey said.
Employers increasingly are offering less-expensive coverage, health savings accounts or health reimbursement accounts. Fifty-four percent of employers in February 2015 offered HSAs, HRAs or less-expensive plans than they previously available, compared with 37 percent of employers that offered such coverage in May 2013, according to the results released March 24 and related results released June 24, 2013, from SHRM's “Health Care Reform—Challenges and Strategies” survey. As of February 2015, 13 percent of employers that are not already offering such coverage are planning to offer it. Thirty-three percent of employers as of February 2015 are not planning to offer such coverage.
In 2015, employers with at least 100 full-time equivalent employees must offer to full-time employees and child dependents affordable health plans that provide at least minimum essential coverage, and employers with at least 50 full-time equivalent employees must offer qualifying coverage starting in 2016 to full-time employees and child dependents.
The upcoming excise tax in 2018 on high-cost employer-sponsored health plans, also known as the Cadillac tax, is to have a rate of 40 percent and would be assessed on high-cost employer-sponsored coverage greater than $10,200 for self-only coverage and more than $27,500 for other-than-self-only coverage granted to an employee for 2018, with annual adjustments to these thresholds for inflation.
Among the 77 percent of employers whose health care coverage costs increased from January 2014 to January 2015, 24 percent of these employers experienced cost increases of at least 16 percent, the survey results said. However, these increases do not contrast the widespread reports that the average annual increases for employers' health care costs have reached among the lowest percentages in 15 years, as the increases of at least 16 percent were reported by just one-fourth of responding employers, not the entire sample.
Health care costs for employers on average increased by 4.1 percent in 2013, a 15-year low, increased by about 4.4 percent in 2014 and are to increase by 4 to 5.2 percent for 2015, according to results of a Towers Watson survey released March 6, 2014, and results of another Towers Watson survey released Aug. 20, 2014.
Sixteen percent of employers whose health care costs increased from January 2014 to January 2015 experienced increases of 11 percent to 15 percent during that period, SHRM's survey results said. Thirty-eight percent of employers whose health care costs increased experienced increases of 6 percent to 10 percent, and 21 percent of such employers experienced increases of 1 percent to 5 percent. Health care costs were relatively constant from January 2014 to January 2015 for 17 percent of employers.
Six percent of employers experienced decreases to their health care costs over the period, and 16 percent of these employers experienced decreases of more than 10 percent, SHRM said.
For health plans with plan years that ended from June 2013 to May 2014, about half of employers increased employees' share of costs, and about one-fourth of employers were to increase employees' share of costs for plan years that end from June 2014 to May 2015, according to the results of SHRM's 2014 Strategic Benefits—Health Care survey, released Jan. 22.
Many employers have updated their standard of how many hours an employee needs to work each week to be eligible for employer-sponsored health care coverage to accord with the ACA's definition of a full-time employee, which generally is an employee who work at least 30 hours each week.
While 39 percent of employers in May 2013 offered health care coverage to employees who worked at least 30 hours each week, 54 percent of employers in February 2015 offered coverage to such employees. The percentage of employers that offered health coverage to employees who worked fewer than 30 hours each week decreased to 20 percent from 28 percent over the period.
However, 26 percent of employers in February 2015, down from 33 percent in May 2013, still offered health care coverage only to employees who worked more than 30 hours each week, almost the same percentage as the 27 percent of the survey's respondents that were employers with one to 99 employees and therefore not required in 2015 to offer health care to employees who fulfill the ACA definition of full-time employee.
For more information, see Compensation and Benefits Library's “Effective Dates for Key Provisions Under the Affordable Care Act” chapter.
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