It was inevitable. When the Patient Protection and Affordable Care Act (PPACA) was signed into law, it expanded access to health insurance to about 35 million Americans. Paying for all those people is going to be a tremendous burden — to health plans, and in turn, to employers — according to Impact of Health Reform on 2011 Health Plan Cost, from Segal, a benefits, compensation, and human resources company.
“It’s all about moving limits,” says Edward Kaplan, Segal’s senior vice president and national health practice leader. “The biggest cost item is extending coverage to dependent children to age 26,” says Kaplan. Insurers estimate the increase to be between 0.1 percent and 1 percent for 2011.
Major health insurers, HMOs, and third party health plan administrators were surveyed. They cover approximately 80 percent of employees enrolled in group health plans.
“For next year, PPOs report costs to be over 11 percent. That’s a 2.5 percentage point jump from 2010,” says Kaplan. Up to two of those percentage points are attributable to health reform. Almost all insurers will see an increase in costs because dependent eligibility was raised to age 26, Kaplan says. Insurers would generally pass along those additional costs to employers.
Kaplan points out that employers provide the following coverage options: single coverage, single-plus-spouse coverage, and family coverage.
There’s no additional premium contribution that the employer collects should an employee’s 24-year old son enroll in the plan. “It’s a pure 100 percent add-on cost for the employer.”
Employers face an administrative burden of verifying the employment status and access to care of that employee’s 24-year-old son.
“It’s a no-brainer that the kid is going back on a parent’s plan, especially if the parent has no contributions, or it’s a richer plan, especially if the 24-year-old is working full-time but has expensive health care coverage. The kid could save $200 a month by enrolling in the parent’s plan,” says Kaplan.