Health reform’s requirement that employers insure work forces will hit the retail and hospitality industries harder than others, because they are staffed with more low-wage and part-time workers, consulting firm Mercer LLC reported on Aug. 8.
Forty-six percent of surveyed firms in the retail and hospitality sectors predicted health care cost increases of at least 3 percent complying with health reform rules, according to Mercer’s survey of 1,203 employers.
Reform-related increases are in addition to health cost inflation rising at double the rate of general inflation, Mercer stated.
Mercer also found expecting such increases: 40 percent of surveyed firms in the healthcare industry; 33 percent of surveyed firms in manufacturing; 32 percent of financial service firms; 31 percent of transportation firms; and 24 percent of firms in the government sector.
Sixty percent of respondents said they expected some form of cost increase due to reform, and of that, one-third (20 percent of the whole) forecasted increases of 5 percent or more.
One reason for more cost is the bypassed Medicaid expansion, which was the one part of the federal law that was stricken by the U.S. Supreme Court. More low-wage employees who would be covered under the higher Medicaid limits, will remain in employer plans because of that ruling.
Expanded Coverage Brings Changes
Behind these costs is the health reform requirement that employers to offer coverage to all employees working 30 hours or more per week or face penalties.
Industries that have a high percentage of low-wage, part-time workers are more likely to restructure work forces so fewer workers make the 30-hour threshold. Industries that are in other sectors are more likely to create a new plan benefit for part-time, low-wage workers, or offer them existing full-time benefits, the report stated.
Forty-six percent of employers in retail and hospitality said they will need to change their health plans to comply with the requirement that coverage be extended to those working at least 30 hours a week. That’s because such firms have large numbers of part-time and lower-paid workers. Health reform’s employer mandate takes full effect in 2014.
Less than 25 percent of surveyed firms in manufacturing, financial services, transportation predicted having to change plans because of the 30-hour a week requirement.
Just 6 percent reported that they intended to immediately stop offering employees health benefits in response to the employer mandates.
Thirty-six percent said they had not begun or were behind in producing and distributing summaries of benefits and coverage, which must be handed out to plan participants in 2013.
About 75 percent of survey respondents said they had made sufficient progress: (1) implementing the $2,500 cap on health FSA accounts; and (2) preparing the 2012 W-2 form to include amounts spend on health coverage.