A project of the George Washington University's Hirsh Health Law and Policy Program and the Robert Wood Johnson Foundation

KFF releases annual Employer Health Benefits Survey

Posted on September 11, 2012 | No Comments

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Annual premiums for employer-sponsored family health coverage reached $15,745 this year, up 4 percent from last year, with workers on average paying $4,316 toward the cost of their coverage, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2012 Employer Health Benefits Survey. This year’s premium increase outpaced the growth in workers’ wages (1.7 percent) and general inflation (2.3 percent).

The 14th annual survey of more than 2,000 employers highlights trends in employer-sponsored health insurance costs and coverage. The survey reveals significant differences in the benefits and worker contributions toward family premiums between firms with many lower-wage workers (at least 35 percent of workers earn $24,000 or less a year) and firms with many higher-wage workers (at least 35 percent of their workers earn $55,000 or more a year).

According to the survey, an estimated 2.9 million young adults are currently covered by employer plans this year as a result of an Affordable Care Act (ACA) provision that allows young adults up to age 26 without employer coverage of their own to be covered as dependents on their parents’ plan. That’s up from the 2.3 million in the 2011 survey. The survey also reports that 48 percent of covered workers are in “grandfathered” plans as defined under health reform, down from 56 percent last year.

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A new rule issued by the Internal Revenue Service (IRS) addresses several components of the employer shared responsibility provisions within the Affordable Care Act (ACA). The rule further delays the employer shared responsibility payment for medium-sized businesses (50-100 employees) until 2016. Large employers will be able to phase in the percentage of full-time employees to whom they must provide health insurance, starting with 70% in 2015 and moving to 95% by 2016. IRS also released a fact sheet to accompany this rule. Additionally, this rule stated that teachers cannot be considered part-time employees because many do not work a full summer schedule.
The Internal Revenue Service (IRS) released two proposed rules concerning employer coverage requirements under the Affordable Care Act (ACA). The first rule addresses reporting requirements employers must satisfy in order to be deemed compliant with the ACA. Businesses with more than 50 full-time equivalent employees must offer affordable insurance, statutorily defined as less than 9.5% of the employee's income. This provision of the ACA was delayed until 2015, but the IRS is encouraging employers to comply in the interim. The second proposed rule described the method by which employers offering minimum essential coverage will report the type and period of coverage they offer to their employees. The IRS will use this provided information to determine if the employer has satisfied the coverage requirements under the law.
The Internal Revenue Service (IRS) published new guidance concerning the implications of delaying the employer shared responsibility provision of the Affordable Care Act (ACA). The guidance states a streamlined version of the rules will go in place at the onset of 2015. In the interim, IRS is encouraging employers to offer coverage and report the relevant income and insurance data, although they will not be penalized for non-compliance. Additionally, the guidance states that individuals not receiving affordable coverage from their employer will be able to obtain insurance from the Exchanges and will be subsidy-eligible based upon their income.
In a blog post published by the US Department of Treasury, the administration announced they will delay the employer shared responsibility provision of the Affordable Care Act (ACA) until 2015. As a result, employers with more than 50 employees that do not offer health insurance will not be held responsible for the associated penalty, which is a fine of up to $3,000 per employee, excluding the first 30. Mark Mazur, Assistant Secretary for Tax Policy, cited the complexity of the reporting requirements for large employers as the reason for the delay. Giving employers an additional year to comply with the regulations will allow the administration to devise simpler reporting methods that are more consistent with the law, and it provides employers additional time to adapt health coverage and reporting systems. Mazur also noted that most large companies impacted by the shared responsibility provision of the ACA already offer health insurance to their employees.
A Congressional Research Service (CRS) report released last week clarified confusion associated with how companies treat their part-time and seasonal workers, and how this treatment may make them eligible for employer penalties under the Affordable Care Act (ACA). The CRS report includes updated information on employer penalties, which was provided by IRS guidance released late last year. According to the ACA, employers with a minimum of 50 full-time equivalent employees must offer affordable and adequate health insurance to their employees, or run the risk of receiving significant penalties under the law. The confusion on the issue stems from the difference in calculating which businesses are subject to penalties, and the IRS guidance helps to clarify this issue by explaining the ACA's classification of a full-time employee and provisions related to seasonal workers.
The Urban Institute, with support from the Robert Wood Johnson Foundation, released a report concentrating on small businesses choosing to self-fund in order to avoid provisions under the Affordable Care Act (ACA). Companies that self-fund use their own financial resources to provide benefits for employees, therefore holding the risks of their insured employees themselves (fully-insured businesses contract with insurance companies to provide these services). Some small businesses find this approach as an attractive measure to possibly maintain lower premium costs, especially if they employ young, healthy individuals. The report discusses the current status of self-funding among small businesses in 10 states, as well as factors that may cause small businesses to self-fund.
The Government Accountability Office (GAO) released a report yesterday which reviews estimates of the impact of the Affordable Care Act (ACA) on employer-sponsored coverage. According to some researchers, the ACA's Medicaid expansion and subsidized coverage for low- and moderate-income people who buy health insurance through Exchanges beginning may discourage employers from offering coverage. However, other researchers believe that the financial penalties imposed by the ACA will actually encourage employers to offer coverage. The GAO report examines 27 studies published between January 1, 2009 and March 30, 2012 that offer estimates regarding changes in employer-sponsored health coverage as a result of the ACA.
In the 2012 Deloitte Survey of U.S. Employers: Opinion about the U.S. Health Care System and Plans for Employee Health Benefits, nine percent of companies, which represent three percent of the workforce, anticipate dropping health insurance coverage sometime within the next three years. The survey reported that 81 percent of companies, which represent 84 percent of the workforce, plan to continue offering employer-sponsored health insurance. Ten percent of companies, which represent 13 percent of the workforce, reported that they were unsure whether or not they would keep employee health benefits. According to the survey, many employers are considering sending their employees to participate in the Affordable Care Act's (ACA's) Exchanges. Small employers are the most likely to be interested in such an option. Deloitte's report collected the results of a web survey of 560 randomly selected employers with 50 or more employees. Participants included chief executive officers, chief financial officers, and chief human resources officers.
A new report published by Truven Health Analytics says that employers choosing to drop their group health insurance plans and pay the penalties under the Affordable Care Act (ACA) would experience no cost advantages. Furthermore, the report suggested that employers who do choose to suspend health benefits would incur sizable operational and productivity repercussions. These negative outcomes, the report concluded, would thus discourage most large employers from shifting employee health benefit strategies after ACA implementation. Truven reported three key findings. First, employers would experience no immediate or long-term cost advantage by eliminating group health benefits. Second, employers would experience higher costs in scenarios where employees are shifted into exchanges for health benefits. Employees would suffer a significant cut in total compensation in situations where employers eliminate group health benefits and thus force employees to assume benefit costs.
Employment-based health benefits are the most common form of health insurance in the United States. In 2010, 58.7 percent of non-elderly individuals were covered by employment-based health plans, with 68.6 percent of working adults covered. However, the percentage of the population with employment-based health benefits has recently been in decline due to the 2007-2009 recession. The percentage of individuals under age 65 with employment-based health benefits fell from 62.4 percent in 2008 to 58.7 percent in 2010, and the percentage of workers with coverage through their own employers fell from 54.2 percent in 2007 to 51.5 percent in 2010, its lowest level since 1994. The Employee Benefit Research Institute (EBRI) recently published an Issue Brief to examine the state of employment-based health benefits among workers with respect to offer rates, coverage rates, and take-up rates. It also examines how the state of employment-based health benefits has changed since the mid-1990s, reasons why workers do not have employment-based health benefits from their own employers, and how these reasons have changed since the 1990s. The estimates presented in this paper can also serve as a baseline against which to measure the impact of the Affordable Care Act of 2010 (ACA) on employment-based health benefits in the future.