Few Low-Income Workers Enrolling in Employer-Sponsored Plans
While some Affordable Care Act provisions aim to expand low-income workers' access to employer-sponsored health coverage, evidence increasingly suggests that relatively few low-income workers have opted to enroll in such coverage, the New York Times reports (Cowley, New York Times 10/19).
Under the employer mandate, companies with at least 50 full-time workers will be required to offer health insurance. Companies that fail to do so face fines. Currently, companies with at least 100 workers face penalties if they do not offer coverage to at least 70% of their full-time employees. The mandate will go into effect for companies with at least 50 workers next year (California Healthline, 8/13).
Further, the ACA requires that employer-sponsored individual health plans must not cost more than 9.5% of an employee's household income.
Some Predict 'Single-Digit Take Rates'
Many business owners have said that since the employer mandate went into effect for companies with 100 or more employees, few employees have purchased the coverage that the companies are required to provide.
Michael Bodack, a New York-based insurance broker, said, "Based on what we've seen in the marketplace, we're advising some of our clients to expect single-digit take rates."
Meanwhile, a survey released by Mercer earlier this year found that the employer mandate has not yet significantly affected the number of workers who have signed up for employer-sponsored coverage.
Reasons for Low Uptake
Gary Claxton, a vice president at the Kaiser Family Foundation, said low-income, full-time workers "are folks that didn't have coverage before, and they're not being given much help to get coverage now."
According to a study by payroll processing company ADP, the rate at which individuals choose to enroll in employer-sponsored coverage increases with workers' annual incomes until annual income levels reach $45,000. While the study was conducted before many ACA provisions took effect, ADP research executive Christopher Ryan said new figures do not suggest significant changes.
Meanwhile, although employer-sponsored health plans meet the ACA's cost-to-income ratio requirements, factors such as high out-of-pocket costs can cause workers to question the plans' affordability, according to the Times.
Issues for Employers
According to the Times, low enrollment rates can create issues for employers, particularly for smaller businesses.
For example, insurers might be hesitant to sell policies to companies that have low enrollment rates because they fear only individuals with health problems will enroll. Further, while the ACA prohibits insurers refusing to issue policies to employers based on low participation rates, the law does not require the insurers to renew the policies (New York Times 10/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.