With only marginal enrollment growth in 2014 (just two-tenths of a percent, according to Mercer’s latest health care reform survey), it remains to be seen just how much impact the shared responsibility requirements will have when they finally go into effect in 2015. But increased plan access for newly eligible employees (those working 30 or more hours per week) combined with higher penalties for individuals that don’t obtain coverage have employers eyeing a number of strategies to keep enrollment growth under control.
Because of their reliance on part-time workers, employers in hospitality and higher education are the most affected by the requirement to extend coverage to all employees working at least 30 hours per week. A whopping 65% of respondents in hospitality need to make changes in order to comply, and with adjunct professors (who traditionally have not been eligible for health benefits) now making up the lion’s share of the faculty at many institutions today, 57% in higher education need to make changes.
Despite some highly publicized cases of employers cutting worker hours or reducing staff, relatively few survey respondents — about one in 10 — say they will make changes to workforce strategy to limit growth in the number eligible for coverage. (The number is more than double among employers in retail and in higher education.) Even these employers won’t necessarily cut the hours of current employees. They may be hiring new employees on the understanding that they will work part time and managing their schedules carefully to ensure that they stay under 30 hours per week.
More commonly, employers faced with enrollment growth are rethinking their commitment to providing coverage to employees’ dependents. About one-fifth say they will raise the share employees must pay to cover dependents.
In addition, many employers are reconsidering the treatment of spouses who have other coverage available. Under the shared responsibility rules, employers are not required to offer coverage to employees’ spouses. While special provisions for spouses with other coverage are not new, employers have thus far moved cautiously to adopt them. However, the recent high-profile decision by UPS to no longer cover employee spouses who have coverage through another employer may be resonating with employers concerned about becoming a “dependent magnet.”
The survey found that about a fifth of employers currently have special provisions in place concerning spouses with other coverage available: 8% don’t permit them to enroll, and 12% require a surcharge. These numbers are only slightly higher than in past years, but about a quarter of respondents said they were considering adding such a provision. The largest employers are the most likely to have a spousal provision in place, but among those with 5,000 or more employees, a surcharge is more than twice as common as an exclusion.
So, are spousal provisions having the desired effect? Respondents with these provisions reported that 13% of covered spouses exited the plan in the first few years. As expected, employers having exclusions reported a higher percentage of spouses exiting (18%), however, those with a surcharge also reported a significant decrease (11%).
The public exchanges may offer yet another option for limiting enrollment growth. Employees who qualify for a subsidy may find that an exchange plan costs less than the contribution required for their employer’s plan. Employers can provide this information to employees to encourage them to seek coverage through an exchange. Despite the troubled roll-out of HealthCare.gov, the exchanges now seem to be working, and employers can’t afford to overlook any strategy that helps them to offer competitive health coverage, comply with ACA requirements, and preserve their bottom line.