Executive Perspectives

What Todays Business Owner Needs To Know June 2014

Trends in Health Coverage for
Part-time Workers
Are concerns about the requirements of the new
federal health insurance law causing more employers
to shift to part-time workers?
A new report by the nonpartisan Employee Beneft
Research Institute (EBRI) fnds there is no defnitive
answer to that question yetbut notes that a shift
to part-time employment was underway before the
law was passed and that future trends are likely to
depend more on factors such as the economy and
unemployment rates.
As written, the Patient Protection and Affordable
Care Act of 2010 (PPACA) requires that employers
with 50 or more full-time workers pay a penalty
if they fail to provide health coverage to full-time
workers in 2014, which has raised concern that
employers may respond by cutting back on health
coverage for part-time workers or by increasing
the proportion of part-time workers employed. The
Obama administration has subsequently indicated
that it would delay enforcement of the terms of this
employer mandate.
EBRIs new analysis shows that the recent recession
had already resulted in an increased use of part-time
workers before PPACA was enacted: Between 2006
and 2010, the percentage of workers employed fewer
than 30 hours per week increased from 11.9 percent
to 14.1 percent, and the percentage of workers
employed 3039 hours per week increased from 11.4
percent to 13.2 percent. This may be due to the drop
in the unemployment rate, which fell from 9.9 percent
in March 2010 (the month PPACA was signed into
law by President Obama) to 7.9 percent by the end of
2012. Since the end of 2012, the unemployment rate
has fallen to 6.6 percent, the report notes.
Since the enactment of PPACA, the percentage of
workers employed less than 40 hours per week has
actually declined slightly, said Paul Fronstin, director
of EBRIs Health Education and Research Program
and author of the study. At the same time, while both
full-time and part-time workers have experienced
drops in coverage, part-time workers have been
affected disproportionately.
As the report notes, part-time workers have a far
lower rate of health coverage than full-time workers.
Overall, there were 20 million workers employed
under 30 hours per week and 18.8 million employed
3039 hours per week in 2012. Among those
employed fewer than 30 hours per week, 2.6 million
(12.8 percent) had employment-based coverage from
their own job, and among those employed between
3039 hours per week, 6.3 million (33.6 percent) had
employment-based coverage from their own job.
In This Issue:
Trends in Health Coverage for Part-time
Workers
Employer Preparedness for the ACA on
Upswing, Small Business Lags in Awareness
of SHOP Health Exchanges
Study Shows Applying Value-Based Insurance
Design to High-deductible Health Plans Could
Beneft Millions of Americans
Group Long Term Care Insurance Gains Favor
as Options Increase
This newsletter is for informational purposes only and should not be considered as legal advice.
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Executive Perspectives June 2014
In contrast, 60.5 percent of workers employed at least
40 hours per week had employment-based coverage
from their own job. News from EBRI A key related
issue is dependent health coverage for children
or spouses of part-time workers, which has been
sharply declining. As the EBRI analysis points out,
the likelihood that a worker employed fewer than 30
hours per week had employment-based coverage as a
dependent fell substantially between 2000 and 2009:
In 2009, 35 percent of these workers had dependent
coverage, down from 46.8 percent in 2000.
During this time, the percentage of workers employed
3039 hours with coverage as a dependent fell from
26 percent to 20.5 percent, while the percentage of
workers employed 40 or more hours per week with
coverage as a dependent was mostly constant except
for a slight drop from 2003 to 2004.
Employer Preparedness for
the ACA on Upswing, Small
Business Lags in Awareness
of SHOP Health Exchanges
With the frst round of employer mandates required by
the Affordable Care Act (ACA) set to begin in 2015,
a new survey fnds that employers appear more
informed about their companies options for providing
health insurance than employers interviewed last
year. In a 2013 benchmark study, only 37 percent of
employers reported being very informed about their
companies options for providing health insurance;
in the 2014 study, 69 percent report being very
informed. 2014 results come by way of a new national
survey of over 300 employee benefts decision
makers conducted online in March and April by Harris
Poll on behalf of the Transamerica Center for Health
Studies
SM
(TCHS) and released today.
Among small businesses, the survey revealed that
only six in 10 (59 percent) of those with fewer than 50
full-time equivalent employees are aware of the new
Small Business Health Options Program (SHOP),
compared to eight of 10 businesses overall (79
percent).
This may be an area where more education is
needed, said TCHS Executive Director Hector De
La Torre. Small businesses with fewer than 50 FTE
employees are currently the only businesses eligible
to participate in SHOP, yet four in 10 do not know
about it. Businesses of this size employ nearly 34
million workers, according to the Small Business
Administration, so its a signifcant gap to address.
The TCHS survey, Pulse Check on Employer
Preparedness for the ACA, also found that 28
percent of employers actually expect their number of
employees to increase due to the ACA, compared to
15 percent that expect the number to decrease. Most
employers (64 percent) plan on taking some action
to comply with the ACA, with 19 percent planning
to change plan options and 17 percent planning to
change insurers.
Other key fndings from the survey include:
Roughly three in 10 (29 percent) employers are
researching alternative actions that may not
require strict adherence to ACA mandates.
Almost a quarter (23 percent) of U.S. businesses
are researching reductions in employees or
full-time employees in preparation for changes
related to the ACA.
A third of businesses with 100+ full time employees
(33 percent) are researching reductions.
Fifteen percent are calculating the cost of the tax
penalty vs. the cost of providing insurance.
Small businesses with fewer than
50 FTE employees are currently the
only businesses eligible to participate
in SHOP, yet four in 10 do not know
about it.
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Executive Perspectives June 2014
Most medium size (50-99 full time employees)
employers are aware of the ACA mandate
deadline extension.
Ninety-one percent of employers with 50-99 full
time employees are aware that the deadline for
companies of their size to offer employees health
care insurance by January 2015 was extended
to January 2016.
Virtually all (98 percent) employers of this size
were aware of the mandate in the frst place.
Signifcantly more minority-owned businesses
(85 percent) and women-owned businesses (73
percent) are taking actions in preparation for the
ACA than non minority-owned businesses (58
percent).
Study Shows Applying Value-
Based Insurance Design to
High-deductible Health Plans
Could Beneft Millions of
Americans
Millions of Americans could beneft from expanded
coverage of preventive services under health savings
account (HSA)-qualifed high-deductible health plans
(HDHPs), according to a new white paper authored
by researchers at the University of Michigan Center
for Value-Based Insurance Design and Harvard
University Medical School.
Funded by the Gary and Mary West Health Policy
Center, the study developed and priced hypothetical
HDHPs that incorporated value-based insurance
design (V-BID) principles to better meet the needs
of chronically ill patients and those at high risk for
developing chronic conditions. Chronic diseases
such as heart disease, stroke, cancer, diabetes,
and arthritis are among the most common, costly,
and preventable of all health problems in the U.S.
and cost more than $2 trillion a year, according to the
Centers for Disease Control.
Currently, a person living with diabetes enrolled in an
HDHP must pay out-of-pocket for medically necessary
treatment such as blood pressure and cholesterol
checks, eye and foot exams, and glucose monitoring
services until the deductible is reached and insurance
coverage begins. In the report, the researchers
recommend that the IRS change its current narrow
guidance on prevention for insurers and employers
so that targeted secondary preventive benefts could
be covered under the deductible in HDHPs. This
would provide them with greater fexibility in designing
plans better tailored to the needs of the chronically ill
and those at risk.
It is essential that insurance coverage not discourage
patients with chronic conditions from seeking high-
value, secondary prevention services, said Joseph
M. Smith, MD, Ph.D., FACC, chairman of the West
Health Policy Center Board of Directors. This study
shows that applying value-based insurance design
to high-deductible health plans will allow employers
and health insurers to create products that have the
potential to beneft millions of Americans who ft this
profle. We look forward to sharing these fndings, and
the associated cost savings, with the Administration
and Capitol Hill in the coming months.
Our goal was to fnd ways to enhance the ability
of high-deductible health plans to improve clinical
It is essential that insurance
coverage not discourage patients
with chronic conditions from seeking
high-value, secondary prevention
services.
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Executive Perspectives June 2014
outcomes of the chronically ill while reducing costs,
said A. Mark Fendrick, M.D., Director of the University
of Michigan Center for Value-Based Insurance
Design. We were pleased to discover that expanding
the defnition of prevention to include evidence-
based services that slow chronic disease progression
and prevent related complications could potentially
beneft millions of Americans.
Group Long Term Care
Insurance Gains Favor as
Options Increase
An increasing number of small businesses are
investigating long term care insurance as an
employee beneft or as a tax-favored beneft for
owners according to a just-published report.
Interest in long term care insurance is growing again
especially among frms with 20-to-99 employees,
reports Jesse Slome, director of the American
Association for Long-Term Care Insurance (AALTCI)
a national trade group. There are fve million
companies with that many employees according to
the latest U.S. census data. They account for over
20 million workers.
According to AALTCI, many insurers offer discounts
to group enrollees compared to standard plans
available to individuals. Today, there is enormous
fexibility in terms of beneft options as well as who
is offered coverage, Slome notes. Plans can be
offered on a voluntary basis paid by payroll deduction
or the employer may contribute a nominal amount. It
may even be possible to offer company-paid coverage
exclusively for executives and key employees.
Long Term Care Insurance Plans Not Regulated
By Obamacare
Long term care insurance plans are not regulated
under the Affordable Care Act (Obamacare)
so employers have a great deal of fexibility,
explains George Mellendorf, president of LTC
Solutions, a national distributor of individual and
multi-life long term care insurance headquartered
in Cape Coral, FL. Even small groups with as few
as 10 employees can qualify for simplifed health
underwriting and pricing discounts that can reduce
costs by between fve and 10 percent annually.
The AALTCI analysis of 8,000 employer plans sold in
the past few years found that 21 percent of participants
were less than 54 years of age with four percent of
buyers age 44 or younger. Participants in employer-
sponsored plans tend to be younger and nearly 40
percent had incomes under $75,000, Slome notes.
That is an important trend and we foresee continued
growth of sales to buyers within small groups in the
years ahead, explains Tim Kneeland, President of
Transamerica Long Term Care, a leading provider of
long term care policies within small groups.
Plans can be offered on a voluntary
basis paid by payroll deduction or the
employer may contribute a nominal
amount. It may even be possible
to offer company-paid coverage
exclusively for executives and key
employees.