2014 ADP Annual Health Benefits Report Shows Premium Increases Decelerating
Employer Share of Contributions to Premiums Also Decreases
ROSELAND, N.J., April 3, 2014 /PRNewswire/ — ADP ®, a leading global provider of Human Capital Management (HCM) solutions, today announced the findings of the second-annual ADP Research Institute® report, which highlights significant trends in employer-provided healthcare benefits. Based on five years of actual, anonymous and aggregated health benefits data from U.S.-based companies with 1,000 or more employees going back to 2010, the report provides employers with benchmarks to better gauge the effectiveness of their current strategies and to help plan for changes on the horizon. The first annual report was released in 2013.
The ADP Annual Health Benefits Report: 2014 Benchmarks and Trends for Large Companies highlights the impact that changes such as economic conditions, legislation and workforce demographics have on healthcare benefits. It is intended to provide employers with a valuable baseline for measuring key trends in the years ahead. With these strategic insights, organizations can better build effective benefit strategies for the future.
“It’s no secret that employers are looking for ways to reduce health benefits costs, while still offering effective coverage options to employees,” said David Marini, vice president and managing director, strategic advisory services at ADP. “In an effort to help reduce costs, employers may use one or more strategies, such as changing the health plan premium tiers or levels of coverage, or reduce the employer’s contribution to the coverage of dependents.”
Premium increases leveling off
Average monthly health plan premiums have increased 15% since 2010, to $870.* However, after a sharp increase of 6.9% from 2010 to 2011, the rate of increase has decelerated. Premiums rose just 1.7% from 2013 to 2014. The report showed that health plan premiums rose for employees of all ages over the period 2010-2014.
Employers contributing slightly less
Employer share of contributions to health premiums declined slightly for all groups from 2010 to 2014, regardless of age or number of dependents. The largest decrease was 1.5% for those with dependents. For those with no dependents, the decrease was 1.0%. Employer contribution decreased across all age groups according to the report’s findings.
Other key findings of the 2014 ADP Annual Health Benefits Report include:
Overall participation steady, but varies with age
Between 2010 and 2014, the percentage of full-time employees who were eligible for employer-provided health benefits remained relatively steady at an average of 90%. The overall percentage of those participating in health benefits also remained relatively constant at an average of 68%. However, the averages do not reflect the marked variances among specific age groups, where participation rose among baby boomers as they continue to work into their later years, and participation declined among younger employees.
Employees 50-59 participated in the largest percentage, with 73% of those eligible participating. In all groups 40 and older, participation was over 70% in 2014. In comparison, among employees under age 30, just over half participated in their employer’s health benefits program in 2014. In this group the take rate declined 7.6% between 2010 and 2014.
Costs vary by state
An analysis of 20 selected states showed the cost of health plan premiums — as well as premium increases — varied widely from state to state. In 2014, of the 20 states analyzed, New Jersey had the highest monthly premium, $999, and Georgia had the lowest, $807. New York had the largest percentage of employer contributions at 78%. In Georgia, Missouri and New York, average premiums actually declined in the past year.
“Particularly in today’s ever-changing healthcare climate, employers need actionable healthcare benefits insights to make the right decisions for their businesses and their employees,” said Ahu Yildirmaz, Ph.D., VP and head of the ADP Research Institute. “By analyzing ADP’s actual and anonymous client data, the ADP Research Institute has the unique ability to help employers to make strategic benefits decisions, establish critical benchmarks against which to gauge the effectiveness of their present strategies and plan for upcoming changes affecting health benefits and workforce management.”
To obtain a free copy of the ADP Annual Health Benefits Report: 2014 Benchmarks and Trends for Large Companies, please click here.
About this Report
The ADP Research Institute used anonymous, employee-level yearly panel data from a set of employers spanning 2010 to 2014. This research considered the same set of organizations each year in order to provide consistent comparisons across years. In total, the “matched” subset of U.S.-based organizations was comprised of roughly 550,000 full-time employees each year. All organizations used in this study had 1,000 or more employees for at least one of the five years and no fewer than 800 in any given year. For this study, the ADP Research Institute focused on nonunion, full-time employees.
With more than $11 billion in revenues and more than 60 years of experience, ADP(®) (NASDAQ: ADP) serves approximately 620,000 clients in more than 125 countries. As one of the world’s largest providers of business outsourcing and Human Capital Management solutions, ADP offers a wide range of human resource, payroll, talent management, tax and benefits administration solutions from a single source, and helps clients comply with regulatory and legislative changes, such as the Affordable Care Act (ACA). ADP’s easy-to-use solutions for employers provide superior value to companies of all types and sizes. ADP is also a leading provider of integrated computing solutions to auto, truck, motorcycle, marine, recreational vehicle, and heavy equipment dealers throughout the world. For more information about ADP, visit the company’s Web site at www.adp.com.
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* The average monthly health plan premium includes both employer and employee contributions.