Health


Expats in the US face changes under health care reforms

by Ray Clancy on September 25, 2014

Healthcare reforms in the United States mean that expats could see changes, as a new survey shows that many are considering significant changes to the plans they offer employees.

Two thirds of employers said they would be making changes to their health plans next year to rein in costs, according to the survey by human resources firm Mercer.

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Two thirds of employers said they would be making changes to their health plans next year to rein in costs

Some 73% said they intend to introduce low cost consumer directed plans to reduce costs, within three years as it is expected that per-employee health benefit costs will rise by an average of 3.9% in 2015.

Cost growth slowed to 2.1% in 2013, a 15 year low, but appears to be edging back up. The projected increase for 2015 reflects actions employers will take to manage cost. If they made no changes to their plans for 2015, they predict cost would rise by 5.9% on average.

However, only 32% of respondents are simply renewing their existing plans without making changes.

‘The average projected increase for 2015 may still be relatively low, but it does not come easily. Employers have to work hard each year to keep cost increases manageable. And health reform is certainly creating new challenges,’ said Tracy Watts, senior partner and Mercer’s National Health Reform Leader.

Under health reform, a significant number of employer health plan sponsors (22%) are likely to see enrolment grow next year when they are required to open their plans to all employees working 30 or more hours per week.

Some 63% were in compliance before reform was enacted, and 15% made the necessary changes last year for 2014. Among large retail and hospitality businesses, which typically employ many part time workers, 39% will need to extend coverage in 2015.

‘The maths is simple: the more employees you cover, the more you spend. But this additional spending isn’t accounted for when we talk about the low growth in the cost of coverage,’ said Beth Umland, Mercer’s director of research for health and benefits.

While there has been much speculation that employers would reduce staff or cut hours to limit the number of employees becoming eligible in 2015, few of the surveyed employers say they will take either of those routes.

However, many say they will manage schedules more carefully to avoid workers’ occasionally working 30 or more hours in a week or to make it clear to new hires that they will work fewer than 30 hours.

The tax penalty for individuals who do not obtain coverage will rise in 2015, to a minimum penalty of $325 per individual. When this penalty first went into effect in 2014, the minimum amount was only $95, and few employers experienced significant growth in enrolment.

‘But 2015 could be a different story, not just because the penalty is higher, but because many employees will now have the option to enrol who didn’t before,’ explained Watts.

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