Health Benefits Spending: How Does Your Organization Stack Up?
As employers have expanded health insurance eligibility over the last few years to comply with Affordable Care Act (ACA) requirements, they’ve also had to keep an eye on costs. With more employees being offered health insurance, the challenge is managing health benefits spending while ensuring plans are affordable for their workers. Additionally, many employees and job seekers are increasingly considering health benefits offerings and employer contribution when weighing employment options. This means health benefits can be a key factor in talent recruitment and retention.
According to the 2016 ADP® Annual Health Benefits Report, health insurance premiums rose slightly from 2014 to 2016, but they varied widely by industry and between employers. The report focused on five industries: Finance and Insurance, Health Care and Social Assistance, Manufacturing, Professional Scientific and Technical Services, and Retail Trade. Each had varying premium increases. The highest monthly premium in 2016 was in Professional Scientific and Technical Services, at $966. Manufacturing had the second highest, and Finance and Insurance came in third. The industry with the lowest monthly premium, $719, was in Retail Trade, an industry that is more likely to employ younger workers who may not need much in terms of health insurance coverage. Because higher incomes tend to correlate with higher premiums, and lower incomes correlate with lower premiums, industries that typically include lower-wage positions may be more likely to have lower premiums.
Industries that had lower benefits coverage in the past or that tend to employ younger workers had the most significant cost increase, whereas industries that were previously already in compliance with ACA changes remained stable. Health Care and Social Assistance saw the highest increase in premiums from 2014 to 2016 at 10.2 percent. In industries such as Manufacturing and Professional Scientific and Technical Services, on the other hand, premiums went up very little.
Employer premium contribution share has been relatively stable from 2014 to 2016. The share decreased negligibly in two industries: Professional Scientific and Technology Services and Retail Trade; while slightly increasing in the other three industries: Finance and Insurance, Health Care and Social Assistance, and Manufacturing.
To see how your organization compares with others in the study, download the report and then plot your health premiums and percentage contribution rate against other employers using the chart on Page 25. The midpoint number identifies the premium levels where 50 percent of employers paid more and 50 percent of employers paid less than the specified number. Quartile ranges are also provided to further break down the premium levels.
Although health insurance premiums did not drastically change between 2014 and 2016, employer costs do vary by industry and company. As shifts in the health insurance industry and changing employee demographics impact the cost of health benefits, it’s more important than ever for employers to know where they stand compared with other organizations.
Take a more in-depth look at current health benefits trends and how employers are responding to health insurance changes by viewing the 2016 ADP® Health Benefits Report in its entirety.
About this report: The ADP Research Institute® used anonymous, employee-level yearly panel data from a set of employers spanning 2014 to 2016. In total, the data used for this study consisted of nearly 300 U.S.-based organizations in each year, employing roughly 700,000 employees each year. Although the set of organizations is not identical year-to-year, companies that remain ADP® clients and remain above the minimum size threshold remain in the sample, and there is great consistency year-to-year. Each organization used in this study had 800 or more employees in each year it was included. For this study, the ADP Research Institute® focused on nonunion, full-time employees.
Tags: Benefits Administration