Health Care Reform
Young and Low Wage Workers Face the Greatest Health Care Challenges
Jun 27, 2013 - 4:12:48 PM
The ADP Annual Health Benefits Report: 2013 Benchmarks and Trends for Large Companies brings to light the relative impacts of the initial enacted provisions of the ACA, health plan premium dynamics, changing economic conditions and changing workforce demographics. It is intended to provide employers with strategic insights as they enter into uncharted territory as Health Care Reform is implemented, and to help form a solid foundation upon which organizations can build effective benefits strategies for the future.
"ADP's 2013 Annual Health Benefits Report suggests that younger generations and lower wage workers are facing the greatest healthcare challenges in terms of eligibility and cost, and these are employees that employers will need to carefully consider when designing and communicating their 2014 benefits programs," said Tim Clifford, president of ADP Benefits Administration Services. "In an effort to reduce the risk in their pool of covered workers and potentially reduce costs for the total covered population, employers may choose to extend coverage to employees who were not previously eligible. They may also opt to change the contribution tiers of coverage, adjust part-time/full-time hiring strategies or adjust their contribution to the coverage of dependents. All of these strategies could have far-reaching effects on U.S. businesses, employee compensation and the overall economy."
Other key findings of the 2013 ADP Annual Health Benefits Report include:
Health Plan Premiums Rising - But Moderating
The average monthly premium rose approximately 14% from 2010 to 2013. However, after a spike of nearly 8% between 2010 and 2011, the rate of increase moderated. Premiums rose approximately 3% in the last year. In 2013, the average monthly health plan premium was $832*. While health plan premiums rose for employees of all ages, the steepest increase was among those under 30.
Young Workers Less Likely to Be Eligible for and Enroll in Health Plans
Between 2010 and 2013, the percentage of full-time employees who were eligible** for employer-provided health benefits remained relatively steady at an average of 88%, and participation rates*** remained stable at an average of 65%. Although health benefits eligibility has declined slightly in every age group since 2010, younger workers faced the largest decrease, which may indicate that jobs taken by younger people were less likely to offer health benefits. When employees under age 30 were offered benefits, however, only half participated in their employer's health benefits program in 2013. The ability to obtain health coverage through a parent's health plan up to age 26 may be a partial explanation for this phenomenon.
Health Costs Represent the Greatest Burden for Low Wage Workers
While the cost of healthcare premiums as a percentage of income increased across all income levels, it increased more rapidly for lower-wage employees than any other group. In 2013, health costs represented, on average, 8.4% of income for an employee earning between $15,000 and $20,000 versus 2.1% for an employee earning more than $120,000. This equates to higher total premium costs for higher income employees, but, when adjusted for total covered lives, these higher costs are a result of high income employees covering more dependents.
Wide Range of Cost Disparity between States
An analysis of 21 states with the largest employee populations showed the cost of health plan premiums - as well as premium increases - varied widely from state to state. In 2013, of the 21 states analyzed, New Jersey had the highest monthly premium, $968, and North Carolina had the lowest, $733. Also in 2013, the employer's share of the health plan premium ranged from 79% in New York to 72% in Colorado.
"Today, more than ever before, employers need actionable, strategic healthcare benefits insights to make the right decisions for their businesses and their employees," said Ahu Yildirmaz, Ph.D., senior director, ADP Research Institute. "By analyzing ADP's actual and anonymous client data, the ADP Research Institute has the unique ability to help employers to make strategic benefits decisions and also establish a critical baseline against which to assess the future impact of the ACA upon health benefits and workforce management."
To obtain a free copy of the ADP Annual Health Benefits Report: 2013 Benchmarks and Trends for Large Companies, please click here or visit http://www.adp.com/
About this Study
The ADP Research Institute used anonymous, employee-level yearly panel data from a set of employers spanning 2010 to 2013. This research considered the same set of companies each year in order to provide consistent comparisons across years. In total, the "matched" set of 175 U.S.-based companies was comprised of more than 600,000 employees each year, on average. All companies used in this study had 1,000 or more employees for at least one of the four years and no fewer than 800 in any given year. For this study, the ADP Research Institute analyzed only nonunion, full-time employees.
About the ADP Research Institute
The ADP Research Institute provides insights to leaders in both the private and public sectors around issues in human capital management, employment trends, and workforce strategy. The Institute's other recent healthcare benefits studies released in 2013 include "Planning for Health Care Reform: How Income Impacts Employee Health Benefits Participation" and the "ADP2012 Study of Large Employer Health Benefits" both of which are based on actual, real-world data for approximately one million employees and more than two million covered lives.
With more than $10 billion in revenues and more than 60 years of experience, ADP® (NASDAQ: ADP) serves approximately 600,000 clients in more than 125 countries. As one of the world's largest providers of business outsourcing and human capital management solutions, ADP offers a wide range of human resource, payroll, talent management, tax and benefits administration solutions from a single source, and helps clients comply with regulatory and legislative changes, such as theAffordable Care Act (ACA). ADP's easy-to-use solutions for employers provide superior value to companies of all types and sizes. ADP is also a leading provider of integrated computing solutions to auto, truck, motorcycle, marine, recreational vehicle, and heavy equipment dealers throughout the world. For more information about ADP or to contact a local ADP sales office, reach us at 1.800.225.5237 or visit the company's Web site at www.adp.com.
* The average monthly health plan premium includes both employer and employee contributions.
**Eligible Percentage refers to the segment of the employee population that is qualified to enroll in the health insurance offered by their employers.
***Participation Rate refers to the percentage of all employees (eligible and ineligible) who enroll in the health insurance offered by their employers.
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