Low wage workers most at risk as premium as a percentage income continues to escalate


The 2015 edition of the ADP Annual Health Benefits Report was recently published. In it, ADP highlights several key trends and metrics that brokers and employers can leverage when making important decisions about their benefits program.  The timing of this report is especially valuable, as it has tracked data over a 5 year period since 2011 – when the Patient Protection and Affordable Care Act was signed into law.  One key trend that the report illustrates is that the cost of healthcare premium as a percentage of income has increased across all income levels.  It’s important to note that the largest increase impacted those employees most at risk; employees with incomes between $15,000 to $20,000.  Premium contributions as a percentage of income increased more rapidly for lower-wage employees (than higher-wage employees) and represented a greater percentage of income. 


As an employer, it’s important to think about the purpose of offering an employer sponsored health plan.  For most, it’s to provide healthcare security for employees and their families.  However, with escalating group costs, most employers are faced with critical decisions year after year.  With most small group employers being required to move to ACA compliant plans this year, deciding between increasing employee cost share and decreasing the plan design benefits will continue to be a common event.  This is especially challenging for employees when companies provide little to no employer contributions towards dependent coverage. Although employers often meet the “affordability” test (Employee contributions for EE Only coverage is less than 9.5% of their income), employers and employees alike now question if this is really the best long term solution.


Many employers may actually be doing their employees a disservice by offering employer sponsored health insurance, as it locks them out of valuable subsidy dollars that they would be eligible for.  This is especially true if the employer doesn’t offer a generous contribution toward dependent coverage. Millions of workers would actually be better off today if their employers dropped their health plan.  Benefitter is helping employers redefine health benefits by repurposing benefit dollars in a smart way that can save money, increase transparency to employees about insurance cost and total compensation, and increase coverage for lower wage employees and dependents.


Read the full report here