The annual “open enrollment” period for health insurance — that October tradition when you find out what your coverage will cost next year — has never been a holiday weekend.
This year it might feel more like Monday morning.
Most of Atlanta’s top employers aren’t tipping their hands on their benefits plans for next year, but analysts and experts say the news will be worse than usual for 2014: where workers have seen single-digit increases in premium costs in past years, they may see double-digit increases this year.
And this time, companies may blame premium increases and higher deductibles on something besides health care inflation. As Delta Air Lines and UPS did recently, they may point to health care reform.
“In the past, most employers would put out a notice to talk about why health care costs were going up that year. This is the first time where they might also say it’s partly because of the (Affordable Care Act),” said Helen Darling, president of the National Business Group on Health. “They want their employees to know this isn’t just things they’ve done.”
“I think there’s going to be a lot of it. Otherwise, they’re going to get hammered by their employees,” said Warren Kingsley, employee benefits partner at the law firm Arnall Golden Gregory in Atlanta.
How much employee health care costs will rise next year — and how many employers will cite “Obamacare” as a reason — won’t be known for sure until benefits packages go out, mainly in October. (Employers will also be sending out notices before Oct. 1 informing their employees of the opening of the new insurance exchanges created by the Affordable Care Act.)
Most large corporations based in Atlanta that were contacted, including Coca-Cola, Home Depot and SunTrust, declined to answer questions about the impact of the health care law’s costs on benefits and employee premiums next year, even after Delta Air Lines and UPS recently went public on the issue.
UPS said in a memo to employees that historically it has cost 6 percent to 7 percent more each year to provide coverage to its non-union employees. The company anticipates an 11.25 percent jump for next year, however, figuring 7.25 percent for inflation and 4 percent for the Affordable Care Act.
UPS said it will not increase the health care cost to its nonunion employees. But it will no longer cover employees’ spouses, if the spouse can get health care through their own employer.
Delta CEO Richard Anderson said in an internal memo out Wednesday that health care reform and inflation together would add nearly $100 million in costs to the airline’s plan, and that the company “will absorb around 85 percent of these additional costs.” The rest will be covered “through some small changes to our health care plans and marginal premium increases between $3 and $22 per month in our account-based plans.”
‘We’ve seen premiums go up’
A survey by the International Foundation of Employee Benefit Plans found that 37 percent of companies with 10,000 or more employees expect health reform to add 1 to 2 percent to their costs. (Most other companies said their costs would go up even more because of the health law; for example, 14 percent thought costs would rise by more than 10 percent.)
“We’ve seen premiums go up, deductibles go up and we can expect to continue to see that, and part of that continuation is due to the ACA,” said Paul Fronstin, director of the Health Research & Education Program at the Employee Benefit Research Institute. “How much is debatable. The devil is in the details, and every employer is different.”
“I would expect employees are going to be disappointed,” said Richard Wilcox, a partner in the Atlanta office of accounting firm Carr Riggs Ingram. “They’re going to see their health care costs rise. They’re going to have less money in their pocket.”
Aflac, the Columbus employee health insurance company, did its own survey of employers and found 69 percent said costs to employees will rise as a result of health care reform. Aflac itself does not plan to “significantly change its health care coverage or increase health care costs for its employees in 2014,” said Audrey Boone Tillman, executive vice president, corporate services.
Another large metro Atlanta employer, Emory University, said that, “as a result of changes and fees associated with the Affordable Care Act,” it anticipates additional costs of 1 to 2 percent. The university would not put a dollar figure on the cost increase, calling it speculative.
Emory also said it’s unknown at this time whether any of that extra cost from the health care overhaul will be passed on to employees.
Employee benefits professionals say some of the cost increases will come from expanded services. Among them are covering children of employees to age 26, and eliminating lifetime maximums on insurance payouts. Emory cited offering 100 percent coverage for preventive services including health screenings such as mammograms, colonoscopies and blood pressure tests.
Delta and UPS
Delta Air Lines let its employees know the impact of health care reform when it shared with them a letter sent to a federal official complaining that the new health care law will cost the company and its employees tens of millions of dollars annually.
Delta spelled out $38 million in extra costs and said its total health care costs will rise nearly $100 million next year if inflation is included.
The airline, which reported a net profit of $685 million in the second quarter of 2013, noted three costly reform requirements:
- A $63 fee for each employee and dependent covered by a company's health plan. As of next year, employers will have to pay the fee to help support state insurance exchanges. For Delta, that's $10 million more next year.
- Insuring employees' children until 26, which has added more than 8,000 children to Delta's coverage at an extra cost of $14 million a year.
- Covering employees who previously did not take coverage, which will cost an extra $14 million a year, minus the premiums they will pay.
In its memo to workers, UPS said about 15,000 of the 33,000 spouses of non-union U.S. employees currently covered by the company will have to get health care through their own employers.
“This change is consistent with the way many large employers are responding to the costs associated with the health care reform legislation,” UPS said.
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