Health Benefit Costs to Edge up in 2015

Employers are predicting that health benefit costs will rise 3.9% per employee in 2015, according to a Mercer survey. At 2.1%, cost growth reached a 15-year low in 2013, but appears to be edging back up. Employers say that costs would rise 5.9% if they made no changes to their plans for 2015. But only 32% of employers are simply renewing their plans without making changes. “Employers have to work hard each year to keep cost increases manageable. And health reform is certainly creating new challenges,” said Tracy Watts, senior partner and Mercer’s National Health Reform leader. Twenty-two percent of employer health plans are likely to see enrollment grow next year when they open their plans to all employees working 30 or more hours per week. Thirty-nine percent of the large retail and hospitality businesses, which typically employ many part-time workers, will need to extend coverage in 2015. Beth Umland, Mercer’s director of Research for Health and Benefits said, “While there has been much speculation that employers would reduce staff or cut hours to limit the number of employees becoming eligible in 2015, few…will take of those routes.” However, many say they will manage schedules more carefully to avoid workers’ occasionally working 30 or more hours in a week or to make it clear to new hires that they will work fewer than 30 hours, she added.” It’s hard to predict how many newly eligible employees (generally lower-paid, variable-hour workers) will enroll in health plans. The tax penalty for individuals who do not get coverage will rise in 2015 to a minimum of $325. The minimum was only $95 in 2014. Few employers have seen significant growth in enrollment. But 2015 could be a different story, not just because the penalty is higher, but also because many employees now have the option to enroll, said Watts. Consumer-directed health plans (CDHPs) that are eligible for a health savings account cost 20% less than traditional health plans. While about half of large employers offer a CDHP, 73% expect to have a CDHP within three years. And 20% say it will be the only option for employees. Today, only 6% of large employers have moved to full-replacement CDHPs. The move toward high-deductible consumer-directed plans is spurring more voluntary options. In addition, private benefit exchanges make it easier for employers to offer a range of medical plan options and voluntary benefits. For more information, visit www.mercer.com.

Last Updated 06/23/2021

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