Human Capital & Careers

Health Plan Enrollment Fears Prove Moot

New Affordable Care Act requirements to offer health benefits to more employees didn't budge the enrollment needle at all.
David McCannMarch 18, 2015
Health Plan Enrollment Fears Prove Moot

Many companies feared that new health-insurance eligibility provisions under the Affordable Care Act that took effect for 2015, as well as the ACA’s individual mandate, would cause more employees to enroll this year, pushing up costs.

Any hand-wringing over the matter appears to have been unjustified, however.

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

With open enrollment results now in, Mercer reports in “Health Care Reform Five Years In” that there was virtually no change in the percentage of employees, full-time and part-time, who enrolled in employer-sponsored health plans.

While there was a 1.6% increase in the number of employees enrolled, that was the result of a 2.2% increase in the size of the work force.

“Employers that had to offer coverage to more employees were braced for a bump in enrollment this year, but they didn’t know how big it would be,” says Tracy Watts, a senior partner and leader for health reform at Mercer. “But while some did see increases, for the most part it seems the newly eligible either had coverage through a parent’s or spouse’s plan or through Medicaid — or are continuing to go bare” despite the new tax penalty for those without health insurance.

For 2015, companies with 100 or more full-time-equivalent employees (FTEs) were required to offer insurance to at least 70% of their full-time workers. In 2016, that threshold will be 95%.

And, for this year, employees who work at least 30 hours per week, or whose service hours equal at least 130 hours a month, for more than 120 days in a year are considered full time. Most of the newly eligible were those working at least 30 hours a week but less than 40 hours, whom their employers had previously considered to be part-timers and not eligible for insurance.

But there weren’t too many of those. Across all 600 employers that participated in the survey, the average percentage of employees who were eligible for coverage rose just one percentage point. And the average percentage of eligible employees who enrolled actually dropped a point, from 84% to 83%. That left the average percentage of all employees (both eligible and ineligible) who enrolled in 2015 essentially unchanged from 2014, at 74%.

Enrollment chartAmong respondents in the food and lodging businesses, the industry sector most affected by the 30-hour rule, the average percentage of employees eligible for coverage rose from 57% to 60%. But overall enrollment at those companies crept up by just one point, to 34%.

Why didn’t the ACA rules have a bigger impact on enrollment? Mercer found that most respondents, 81%, were already in compliance with the eligibility requirement prior to 2015. And among those employers that did extend coverage to more employees, many found that few of the newly eligible chose to enroll.

While the individual mandate may have inspired some employees to enroll for the first time, other factors may have drawn employees out of employer plans. While 18% of all respondents (and 31% of those with 5,000 or more employees) believe that more employees elected coverage than in past years due to the individual mandate, 7% of all respondents (and 14% of those with 5,000 or more employees) believe some former enrollees now waive coverage because they are eligible for expanded Medicaid.

Additionally, some employers took steps to hold down enrollment growth. This included reducing hours of at least some employees who consistently worked 30 or more hours per week so that they did not become eligible for coverage, or keeping new hires to less than 30 hours per week. Very few respondents — just 2% — said they increased staff so that more employees would work fewer hours each (see chart above).