Expats In US To See Changes From Obamacare

By Dex Tennyson, for ExpatBriefing.com 23 September, 2014

Expats in the US will see changes as a result of Obama's healthcare reforms, according to a recent survey, which showed that employers are considering significant changes to the plans they offer their employees to cut costs.

Two-thirds of employers in a recent survey said they would be making changes to their health plans next year to rein in cost growth. Mercer, which conducted the survey, found that many employers are looking to introduce low-cost consumer-directed plans to reduce costs, with 73 percent of large employers expected to offer such a scheme within three years.

Employers will soon need to provide health plans to employees working 30 hours a week or more. 63 percent were already offering health plans to these employees prior to the reforms, and 15 percent began offering coverage last year for 2014. Among large retail and hospitality businesses, which typically employ many part-time workers, 39 percent will need to extend coverage in 2015.

Mercer said that, if companies do not adapt their policies, the cost of providing coverage will rise by 5.9 percent on average. That being said, 32 percent of respondents said they intend to simply renew their existing plans without making changes.

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

"The math is simple – the more employees you cover, the more you spend," added Beth Umland, Mercer's Director of Research for Health and Benefits, "but this additional spending isn't accounted for when we talk about the low growth in the cost of coverage."

With the introduction of the new requirement that employees working 30 hours or more must be covered, there has been much speculation that employers would reduce staff or cut hours to limit the number of employees becoming newly eligible to health benefits in 2015. However, few of the surveyed employers say they will take either of those routes. Many said, however, that they will manage schedules more carefully to avoid workers occasionally working 30 or more hours in a week (53 percent of those employers to be affected by the change) or to make it clear to new hires that they will work fewer than 30 hours (31 percent).

It's hard to predict how many newly eligible employees – generally lower-paid, variable-hour workers - will choose to enroll in health plans when given the chance, Mercer said.

Under Obamacare, the tax penalty for individuals who do not obtain coverage will rise in 2015, to a minimum penalty of USD325 per individual. When this penalty first went into effect in 2014, the minimum amount was only USD95 and few employers experienced significant growth in enrollment. "But 2015 could be a different story – not just because the penalty is higher, but because many employees will now have the option to enroll who didn't before," Watts continued.

Mercer said one strategy employers are using to soften the increase in health spending in 2015 is adding a low-cost, high-deductible health plan for the newly eligible employees – or for all employees. Consumer-directed health plans (CDHPs) that are eligible for a health savings account cost, on average, 20 percent less than traditional health plans. Health reform is clearly accelerating that trend, Mercer said.

While about half of large employers offer a CDHP today, nearly three-fourths (73 percent) say they will have a CDHP in place within three years, and 20 percent say it will be the only choice available to employees (today, only 6 percent of large employers have moved to "full-replacement" CDHPs).

"The move toward high-deductible consumer-directed plans is spurring other changes as well, such as more voluntary options," said Watts. "While some employees are comfortable with a lower level of coverage, offering supplemental insurance alongside a high-deductible plan gives employees access to more protection if they want it."

Tags: Individuals | Compliance | Tax | Business | Speculation | Insurance | Employees | Retail | Expats |


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