A new report suggests young and low-wage workers will face the greatest challenges in terms of health care eligibility and cost. Among employees under age 30, only half participated in their employer’s health benefits program in 2013, compared to 70% of employees age 40 and older, according to the 2013 ADP Annual Health Benefits Report, which examined data from about 600,000 employees from 175 U.S.-based companies.
“It’s a pretty wide disparity,” says Tim Clifford, president, ADP Benefits Administration Services. “That’s significant because we’ve seen that participation rate in the under-30 group drop over the last four years. That is one of the major categories of the population – a sizeable focus group, if you will – for the impact of the ACA this January.”
Leading into 2014, these are the employees who also present communication challenges to employers, suggests Clifford. “We have folks who’ve opted not to participate in the past and they are going to be forced to participate or pay penalties,” he says. Employers will be the ones “helping them understand how to participate on the exchange or understanding what’s available with employer-sponsored coverage.”
And while health plan premiums continue to rise, the rate at which they’re increasing has slowed somewhat, finds the report. The average monthly premium rose approximately 14% from 2010 to 2013. However, after a spike of nearly 8% between 2010 and 2011, the rate of increase moderated. Premiums rose approximately 3% in the last year. In 2013, the average monthly health plan premium was $832. While health plan premiums rose for employees of all ages, the steepest increase was among those under 30.
“That’s good news, that we’re seeing a pretty significant drop in premiums,” says Clifford. “As CDHPs [consumer-driven health plans] have come more into vogue and are being adopted more aggressively by employees and employers, we believe there’s a signal here that because those plans are lower cost, at least in terms of premium contributions to employees, that we may have seen employees participate more in those lower-cost plans, which has had an ameliorating effect on the overall premiums.”
Low-wage workers, meanwhile, are feeling the brunt of rising premiums. While the cost of health care premiums as a percentage of income increased across all income levels, it increased more rapidly for lower-wage employees than any other group. In 2013, health costs represented, on average, 8.4% of income for an employee earning between $15,000 and $20,000 versus 2.1% for an employee earning more than $120,000. This equates to higher total premium costs for higher income employees, but, when adjusted for total covered lives, these higher costs are a result of high-income employees covering more dependents.
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