To inform employers of the latest health benefits trends, the ADP Research Institute® has published the 2016 ADP® Health Benefits Report for the fourth straight year. This report provides employers with a snapshot of key benefits trends in light of changes in the economy, workforce demographics and the Affordable Care Act. Organizations can leverage this information to inform future benefits strategy decisions.
Trends and key metrics in this report include:
Employer-sponsored health benefits system remains stable
The data analyzed from 2014 to 2016 reflects stability in the way employer-sponsored benefits at large companies are offered and consumed. Although there were a few demographic shifts, overall participation was consistent, and changes in premiums and employer costs were steady.
Eligibility rates continue to rise
The percentage of full-time employees (as designated by the employer) eligible for employer-sponsored benefits continued to go up from 2014 to 2016, with a 2.3 percentage point increase overall, as employers have broadened coverage eligibility to comply with the ACA.
Employees under 26 have markedly low participation due to alternate options
Although employees in the 16 to 25 age group have, like the rest of the population, experienced a rise in eligibility, participation is far lower in this younger age group. This points to a trend of younger employees remaining on a parent’s health plan until age 26 (as permitted by the ACA’s extended dependent coverage provision) rather than participating in their own employer’s coverage.
Premiums rising at a modest rate each year
Total health premium cost per employee rose 5.0% from 2014 to 2016. This moderate cost trend is likely due to focused cost management on the part of employers, including the use of self-funding, high deductible health plans, employee health and wellness programs, and resources to assist with provider selection.
Premium increases vary by industry
This study analyzed the average monthly premiums in five selected industries: Finance and Insurance; Manufacturing; Retail Trade; Professional Services; and Health Care and Social Assistance. Over the period studied, average monthly premiums increased in all five selected industries, but at varying rates.
Employer contributions to health plan premiums varied widely by industry, with some industries experiencing a slight rise or fall in the amount covered from 2014 to 2016.
Plan costs directly tied to compensation
Health premiums correlated directly with employee earnings. Lower income workers tended to have lower premiums, and higher income workers tended to have higher premiums. But when premiums are adjusted to account for dependent lives covered, premium costs tend to be similar for employees across all income levels.
The big picture
Overall, the results of the 2016 ADP® Health Benefits Report reflect that employer-provided healthcare plans in the large employer market are stable, and employers are effectively adjusting to changes mandated by the ACA. Changes in costs have been modest, and shifting demographics in the workforce are keeping overall growth in cost per employee lower than in the past.
How Employers and Employees are Responding in the Affordable Care Act Environment