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As Grandmothering Expires, Employer-Sponsored Health Plans See Proposed Renewal Rates of 11 Percent in 2015

The 2015 UBA Health Plan Survey is out. UBA Partner Firms reach out to their clients to generate the responses that build the survey. It’s a great resource representing a cross-section of the nation’s employers. The survey includes plan renewals from June 2014 to May 2015.

The preliminary report offers an overview of the survey results. Customized reports can be generated by reaching out to ClearPath Benefit Advisors.

Below is the preliminary look published on ubabenefits.com:

Employers in states that allowed “grandmothering” – the extension of non-ACA-compliant plans – are now seeing proposed health plan rate increases of 11 percent, on average, according to the 2015 United Benefit Advisors Health Plan Survey.

Many employers, particularly small to mid-size, are still delaying the effects of the Affordable Care Act (ACA). Seventy-three percent of plans in the survey have a renewal date on or after December 1, 65.4% of which were small businesses in the fewer than 100 employee market. Employers in the under 50 employee market saw a 2.1 percent increase in renewals after December 1, 2015, compared to 2014. On average, employers this year saw only a modest 2.4 percent increase in annual health plan cost per employee.

“These delay tactics continue a trend of employers avoiding becoming ACA-compliant, but relief runs out starting next year and permanently ends in late 2017,” says Carol Taylor, Chairwoman of the UBA Client Compliance Solutions Committee and a Benefits Advisor with D & S Agency, a Virginia-based insurance firm and UBA Partner. “Small employers, in particular, need to stay aware of the costs under a compliant plan heading into 2018 and the potential for exceeding the thresholds for the Cadillac Tax.”

employer size

Average Health Plan Costs, Premiums, and Contributions

The average annual health plan cost per employee for all plans in 2015 is $9,736, a 2.4 percent increase from the previous year; employees picked up $3,333 of that cost, while employers covering the balance of $6,403.

type of plan

The average premium for all employer-sponsored plans was $509 for single coverage and $1,211 for family coverage.

20.6 percent of all plans required no employee contribution for single coverage (a 5.1 percent decrease since 2014), and 7.3 percent required no contribution for family coverage (a 3.9 percent decrease since 2014).

For plans requiring contributions, employees contributed an average of $140 for single coverage and $540 for family coverage, which is only a slight increase from 2014 results – 3.7 percent and 5.5 percent respectively.

Employer Coverage

Among all employers surveyed, more than half (53.7 percent) offer only one health plan choice to employees, with 28.7 percent offering two choices. As far as plan choices, preferred provider organizations (PPOs) continue to dominate the market (46.8 percent of plans offered and 54.8 percent of employees enrolled), and health maintenance organization (HMO) plans continue to decrease, as they’ve done since 2012 when they accounted for 19.1 percent of the market but now account for only 17.3 percent. Consumer-directed health plans (CDHPs) continue to show the greatest increase in growth, up 10 percent from 2012 through 2015.

Most employers (72.5 percent) define full time work as 30 hours per week, and 7.6 percent define it as 40 hours per week. Only 9.9 percent of employers require fewer than 30 hours per week.

“With the continued effects of grandmothered plans suppressing the inevitable step-increase in health care costs, the survey results clearly show that we haven’t seen the full impact of the Affordable Care Act on employers’ and employees’ wallets,” says Les McPhearson, CEO of UBA. “But even with the current protections, the increases we are seeing aren’t trivial, making the savings UBA Partners offer—in some cases up to 7 percent—mission critical. As relief runs out, the continued growth of CDHPs and the associated increase in employee cost responsibility will make consumer-focused transparency and wellness tools more necessary than ever before.”