2012 Employer Health Benefits Survey
Section 13: Health Reform
The Affordable Care Act (ACA), enacted in 2010, will meaningfully change the American health care system, including the employer-sponsored health insurance market. While many of the most significant provisions of the ACA take effect in 2014, important provisions became effective in 2010 and others will take effect over the next several years. The 2012 survey asked employers about several provisions that are already in effect, including questions about grandfathered health plans, extending coverage to children through the age of 25, and cost sharing for preventive care.
The ACA provides new standards for employer-sponsored health plans. Many of these standards do not apply to “grandfathered” health plans, those that were created before the passage of the ACA (March 23, 2010) and which have not substantially changed since that time.
Interim final rules released by the Department of Health and Human Services on June 17, 2010, and amended on November 17, 2010, stipulate that firms cannot significantly change cost sharing, benefits, employer contributions, or access to coverage in grandfathered plans.1 New employees can enroll in a grandfathered plan as long as the firm has maintained consecutive enrollment in the plan.
While grandfathered plans are exempted from most of the ACA’s new requirements, they must comply with the following provisions as they become effective: (1) provide a uniform explanation of coverage, (2) report medical loss ratios and provide premium rebates if medical loss ratios are not met, (3) prohibit lifetime and annual limits (phased out by 2014) on essential health benefits, (4) extend dependent coverage to age 26, (5) prohibit health plan rescissions, (6) prohibit waiting periods greater than 90 days, and (7) prohibit coverage exclusions for pre-existing health conditions.2 Firms must decide whether to grandfather their insurance plans, which limits the changes they can make to their plans, or whether to comply with the full set of new health reform requirements.
- Fifty-eight percent of firms offering health benefits report that they have at least one health plan that is a grandfathered plan in 2012 (Exhibit 13.1), lower than the 72% of offering firms with a grandfathered plan in 2011.
- Looking at worker enrollment, 48% of covered workers are enrolled in a grandfathered health plan in 2012, down from 56% in 2011 (Exhibit 13.3).
- Firms with plans that are not grandfathered were asked to respond to a list of potential reasons why each plan is not a grandfathered plan. Twenty-seven percent of covered workers are in plans that were not in effect when the ACA was enacted. Roughly similar percentages of workers are in plans where the deductibles or copayments (36%) or employee premium contributions (34%) changed more than was permitted for plans to maintain grandfathered status (Exhibit 13.4).
- The reasons plans are not grandfathered varied by firm size, with workers in small firms (3 to 199 workers) much more likely than workers in large firms to be in a new plan that was not in effect when the ACA was enacted (55% vs. 19%) (Exhibit 13.4).
Extending Coverage to Adult Children to Age 26
Starting September 23, 2010, the ACA requires all health plans to extend coverage to the children of covered workers up to age 26, whether or not the child is financially dependent. Until 2014, grandfathered health plans are not required to extend coverage to a child of a covered worker if the child has access to employer-sponsored coverage either from a spouse or independently.3 The survey asked firms whether any adult children who would not have been eligible for the plan prior to the change in law had enrolled in health coverage under this provision.
- Thirty-one percent of firms that offer either family or single plus one coverage reported enrolling at least one adult child, who otherwise would not be eligible to enroll, due to the ACA (Exhibit 13.5).
- Large firms (200 or more workers) are more likely to have enrolled an adult child due to the ACA than smaller firms (90% vs. 29%) (Exhibit 13.5).
- The numbers of children who enroll under this provision are closely related to the number of workers in the firm. Smaller firms (3-49 workers) on average enroll one to two adult children due to the provision, while the largest firms (5,000 or more workers) enroll an average of 478 adult children (Exhibit 13.6).
- In total, about 2.9 million adult children were enrolled in their parent’s employer-sponsored health plan due to the Affordable Care Act. This is a significant increase from the number reported in 2011 (2.3 million).4
- Of the total 2.9 million adult children currently enrolled on their parent’s coverage because of the ACA, 1.1 million enrolled at small firms and 1.8 million at large firms.
Coverage for Preventive Care
The ACA requires non-grandfathered health plans to provide coverage for certain preventive services without deductibles or other cost sharing. Grandfathered health plans are also permitted to conform their coverage and cost sharing for preventive care without compromising their grandfathered status. Firms were asked whether they changed the list of services considered to be preventive due to the provisions in the ACA.
- Forty-one percent of covered workers are in a plan that reports it has changed the list of services considered preventive due to the ACA (Exhibit 13.7).