Employers Are Delaying Health Plan Renewals

HPR

by Leila Morris – In 2014, 32% of employers are delaying their health plan renewal date to December 2014 to avoid rate increases, according to a survey by United Benefit Advisors (UBA). NIntety-four percent of the employers that are delaying the renewal date are small businesses in the under 100-employee market.

In states that don’t allow renewal of pre-ACA plans, many small employers are facing rate increases of 30% to 160%. Benefit advisor, Carol Taylor, said, “We’re seeing little change in premium rates and employee benefit plans, and that’s because many employers renewed twice in 2013 to delay the effects of ACA. In the category of employers with 50 or fewer employees, the results are staggering; in 2012, there were 507 employers with a December 1 renewal date. In December 2013, that number was over five times (412.4%) higher at 2,598 employers. This is going to have a ripple effect for years to come in the small group market.” “This trend shows, overwhelmingly, that the full impact of ACA compliance and its effect on health insurance costs is still unknown, but paints a gray picture of what’s ahead for employers,” says Les McPhearson, CEO of UBA.

Employers have seen modest cost increases in recent years. The average annual cost per employee was $9,302 in 2013 versus $9,504 in 2014. But employers are pushing more of the burden onto employees through out-of-pocket cost increases and reductions in family benefits. While average in-network deductibles remained fairly level at $1,901, out-of-pocket maximums increased more than 6% in 2014. The median single out-of-pocket maximum increased $500 to $3,500. Median family out-of-pocket maximum increased $1,000 to $8,000. The increase in medians was more than double the increase in average out-of-pocket maximums for both single and family, which went up less than $250. Taylor said, “If you were to look only at the average out-of-pocket costs and deductibles, you’d be missing a big part of the story. The median numbers show a significant increase because the lower end of the scale is dropping off, so we’re getting used to a new norm in higher out-of-pocket costs.”

The survey also found the following:

  • In 2013, 21% of plans had no deductible in-network for an individual compared to 20% in 2014. Also, 22.5% of plans had no deductible in-network for for a family compared to 20.8% in 2014.
  • In 2013, 8% of plans had no out-of-network deductible for individuals compared to 6.9% in 2014. Also 9.8% of plans had no out-of-network deductible for a family in 2013 compared to to 8.1% in 2014.
  • Plans with 100% coinsurance are also disappearing rapidly, having decreased by 14.8% since 2012.
  • Average annual cost per employee in the West is 9,513 per employee.

For more information, visit www.UBAbenefits.com.

Last Updated 10/20/2021

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