Access Exclusive, Trusted HR News & Resources >>> New Professional Members Save $20 Today
We asked HR professionals to tell us about their time in HR. Here are their stories.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Set yourself up for success with virtual SHRM-CP/SHRM-SCP Certification Prep Seminars.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
New requirement was originally to take effect in 2014
Since the March 2010 passage of the Patient Protection and Affordable Care Act (PPACA), U.S. employers have felt its effects, with an average 2 percent increase in enrollment as of July 2011, attributable largely to the extended eligibility for dependent coverage to employees’ children up to age 26, according to a survey by HR consultancy Mercer released in August 2011.
Impact of Auto-Enrollment
According to the survey of nearly 900 U.S. employers, PPACA’s rule requiring employers to enroll newly hired, or newly eligible, full-time employees automatically into a health plan will cause enrollment to grow by another 2 percent on average in 2014, when the provision is slated to go into effect.
“Employers have already been facing average increases in per-employee health benefit cost of about 6 percent annually for the past six years,” said Tracy Watts, a consultant in Mercer’s Washington, D.C., office. “Adding enrollment growth on top of that puts a real strain on their budgets.”
Cost of Mandates
More than a fourth of respondents (28 percent) said that compliance with PPACA mandates slated to go into effect in 2014—most significantly, extending coverage to all employees working on average 30 or more hours per week, auto-enrolling new full-time employees and ensuring that plans pay for at least 60 percent of covered services—will add at least another 3 percent to their projected 2014 plan costs, with 15 percent expecting an additional cost increase of 5 percent or more.
Despite concerns about cost, employers remain committed to offering medical coverage to their employees. Just 2 percent of survey respondents say they are “very likely” to terminate medical plans after the insurance exchanges are operational, with 6 percent “likely” to do so.
Mercer asked the same question in a survey of U.S. employers conducted a year earlier, just a few months after health reform was signed into law, and employers’ opinions on this question are essentially unchanged. "Employers have spent the past year studying the new law and developing strategies to deal with the increased costs and administrative burdens,” said Beth Umland, director of research for health and benefits for Mercer. “But they don’t seem to have changed their minds about the value of continuing to offer their employees health coverage.”
Default Plan Selection
Of the employer-related reform provisions slated to go into effect in 2014, auto-enrolling new full-time employees seems to be causing the most headaches. Auto-enrollment is seen as a “very significant” or “significant” concern by about a fifth of respondents (21 percent) and by 28 percent of those with at least 5,000 employees.
Employers are already considering how to manage the cost of the auto-enrollment requirement. Among survey respondents that currently offer only one medical plan, most will simply use their current plan as the default plan for auto-enrolling new full-time employees. However, 10 percent say they will add a new, lower-cost plan to use as the default plan, and 3 percent will change to a new, lower-cost plan for all employees.
Among respondents that offer a choice of medical plans, 65 percent will use their current lowest-cost plan as the default plan, 29 percent will use their standard plan (the plan with the highest enrollment) and 7 percent will add a plan as the default for auto-enrollment.
The largest employers—those with 5,000 or more employees—are the most likely to add a plan (11 percent).
“Adding health plan enrollees has such a significant impact on cost that it’s easy to see why employers accustomed to about a 15 percent opt-out rate are concerned about auto-enrollment,” said Watts. “But it’s difficult to predict how employees will react once they weigh the amount of money that will come out of each paycheck if they enroll against the tax penalty for not obtaining coverage.”
Covering Part-Time Workers
The rule that employers must offer “affordable” coverage to all employees working an average of 30 hours or more a week in a month (or else be subject to penalties) is a very significant or significant concern for just 17 percent of all respondents but for 37 percent of those in the wholesale/retail industry, which relies heavily on part-time labor.
Among respondents that have part-time employees but currently do not offer coverage to all employees working 30 or more hours per week, one-half say that they are most likely to change their workforce strategy so that fewer employees work 30 hours or more a week.
is an online editor/manager for SHRM.
Auto Enroll for Large Employees to Kick In,
HR News, April 2010
SHRM Online Health Care Reform Resource Page
• Sign up for SHRM’s free
Compensation & Benefits e-newsletter
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Become a SHRM Member
SHRM’s HR Vendor Directory contains over 3,200 companies