NJBIA 2014 Health Benefits Survey Report to Members Employers committed to health benefits, but costs threaten coverage. As the Affordable Care Act nears full implementation, healthcare coverage costs are continuing to rise for New Jersey employers. The 2014 New Jersey Business & Industry Association (NJBIA) Health Benefits Survey of member companies indicates that while costs are rising, the overwhelming majority of participants said they plan to continue to offer coverage. The 2014 NJBIA Health Benefits Survey, conducted in conjunction with Fairleigh Dickinson University s PublicMind Poll, examined what members are paying for health benefits, how they are responding to the rising costs and the difficult decisions they are making as they select healthcare coverage for their employees.
Contents Small Employers Report Double Digit Increases...3 Companies Offering Health Coverage to Employees Companies Offering Health Coverage by Size Healthcare Coverage Costs Exceed $7,400...4 Average Cost by Average Cost of Health Coverage for 2014 Company Contributions...5 Employer Contribution Toward Coverage Initial Healthcare Quotes...6 Average Cost Increase at Initial Quote Actual Cost Increase by Employer Size Cost Containment Strategies...7 Actions Taken by Employers to Contain Cost Cost Containment Strategies...8 Actions Taken by Employers to Contain Cost by Affording Healthcare Coverage Costs...9 How Employers Paid for Increased Premiums Affording Healthcare Coverage Costs...10 How Employers Paid for Increased Premiums by Enrollment Rates...11 Enrollment for Full Time & Part Time Employees Why Companies Offer Healthcare Coverage...12 Reasons Companies Offer Coverage Most NJBIA Member Companies Offer Healthcare Coverage, but Cost is a Factor...13 Discontinue Coverage Reasons Companies May Discontinue Coverage What Type of Plan Offered...14 Plans Companies Offer Health Plans Offered Plan Selected Most Often...15 Employee Plan Selections Voluntary Benefits...16 Which of the following does your company offer to your employees? Wellness...17 Healthcare Coverage for Union and Non-Union Employees...18 Does your company offer healthcare coverage to both union and non-union employees? Enrollment of Full Time and Part Time Union Employees Healthcare Costs for Union and Non-Union Employees...19 Demographics...20 Conclusion...21 2
Small Employers Report Double Digit Increases It is clear from the results of the survey that NJBIA member companies are overwhelmingly (87 percent) continuing to offer coverage even in the face of increased costs. According to the survey, a large majority (85 percent) of members are reporting that their average healthcare coverage costs increased in 2014. Small employers reported the biggest increase. The group with 1-24 employees saw their costs rise by 24.1 percent. The size of the increase diminished as the size of the company grew. Member companies with 25-49 employees experienced a 16.3 percent increase; 50-99 employees had a 12.9 percent increase; 100-249 experienced an 8 percent increase and those with more than 250 employees saw their costs rise by 7.3 percent. Companies Offering Health Coverage to Employees 13% NONE FULL TIME 87% Companies Offering Health Coverage by Size 1-24 85% 25-49 100% 50-99 93% 100-249 99% 250+ 94% 3
Healthcare Coverage Costs Exceed $7,400 Overall, the average annual cost of coverage for an employee-only plan is $7,416 per employee for 2014. For member companies with 1-24 employees, the average annual cost is $7,560; for members with 25-49 employees, it is $5,892; for 50-99 the average annual cost is $6,708; for 100-249 the average annual cost is $8,136; and for members with more than 250 employees, the cost is $9,960. Meanwhile, the average annual cost of a family plan for NJBIA member companies is $19,116 per employee. For the smallest companies of 1-24 employees, the cost is slightly higher at $19,272. For companies with 25-49, the costs drop to $17,244 per employee. The average cost of parent-child coverage is $11,352 per employee annually. For members with 1-24 employees, the cost is $10,800 per employee; for members with 25-49 employees, it is $9,960; for companies with 50-99, it is $11,556; and for members with between 100-249 employees, it is $15,072. Lastly, the overall annual cost of a husband/wife plan is $15,660. For member companies with 1-24 employees, the cost is $16,008; for those with 25-49 employees, the cost is $12,456; and for companies with from 50-99 employees, the average annual cost is $13,812. Average Cost by TYPES OF PLANS EMPLOYEE ONLY FAMILY HUSBAND / WIFE PARENT / CHILD $25k $20k $15k $10k $5k 1-24 25-49 50-99 100-249 250+ Average Cost of Health Coverage for 2014 EMPLOYEE ONLY FAMILY HUSBAND / WIFE PARENT / CHILD $7,416 $19,116 $15,660 $11,352 4
Company Contributions Member companies report paying on average nearly 80 percent (79.3 percent) of healthcare costs for employee only coverage. This is consistent, regardless of the size of the company. Additionally, member companies pay almost 50 percent (49.6 percent) of the costs of dependent coverage. Employer Contribution Toward Coverage Employee Dependent 100% 90% 80% 81% 82% 70% 60% 73% 72% 64% 69% 61% 50% 40% 48% 52% 50% 30% 20% 10% 1-24 25-49 50-99 100-249 250+ 5
Initial Healthcare Quotes When asking companies to compare their initial healthcare coverage quote to what they ultimately paid for their healthcare coverage results showed a relatively wide disparity between those two numbers. Overall, companies initial quote indicated an average 29.4 percent increase versus an average 21.5 actual increase and a 14 percent actual decrease. When broken down by company size it was clear the smallest companies had the largest initial quote. Companies with 1-24 employees had an initial quote with a 31.8 percent increase, those with 25-49 employees had an initial quote with a 25.4 percent increase; 50-99 with a 22.8 percent increase; 100-249 with a 17.2 initial quote increase and 250+ with a 15.2 percent increase. INITIAL INCREASE 29% Average Cost Increase at Initial Quote ACTUAL INCREASE 21% Actual Cost Increase by Employer Size DECREASE 14% COMPANY SIZE 1-24 25-49 50-99 100-249 250+ 6
Cost Containment Strategies The survey found a wide variety of strategies being adopted to manage healthcare cost increases. Frequent tactics include: increasing deductibles, co-payments or co-insurance (53 percent), increasing employee contributions (29 percent), changing carriers (26 percent), and offering a high deductible health plan (25 percent). The specific tactics used varied by size of company. The three most popular strategies are increasing deductibles, co-payments or co-insurance and increasing employee contributions or changing carriers. The highest percentage of the smallest companies, those with 1-24 employees (53 percent) increased deductibles, co-insurance or co-payments and those with 25-49 employees (61 percent) also chose the same approach. While companies with 100-249 employees chose increased deductibles, co-payments or co-insurance most often (65 percent), those with 50-99 (44 percent) and those with more than 250 employees (41 percent) chose increased employee contributions as their most frequent cost containment strategy. Actions Taken by Employers to Contain Cost Increased 53% Deductibles Switched to a Narrow 8% Network Increased Employee 29% Contributions Increased Wellness 8% Programs Changed 26% Carriers Discontinued 8% Plan Options Introduced High Deductible 25% Health Plan Spousal 7% Surcharge Reduced 19% Benefits Reported No Actions 21% Taken 7
Cost Containment Strategies Actions Taken by Employers to Contain Cost by 1-24 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 25-49 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 50-99 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 100-249 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 250+ 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% Increased Deductibles Increased Employee Contributions Changed Carriers Introduced High Deductible Health Plan Reduced Benefits Switched to a Narrow Network Increased Wellness Programs Discontinued Plan Options Spousal Surcharge Eliminated Dependent Coverage Provide cash incentives in lieu of benefits Move to a defined contribution Structure premium based on income No action taken 8
Affording Healthcare Coverage Costs Businesses are sacrificing to help them pay for increased healthcare coverage costs. Interestingly, 45 percent of those surveyed said they lowered profits to afford increased costs. Thirty-five percent froze or limited wage increases to afford the increases. Twenty-two percent delayed business investments. Relatively few reduced their workforce (12 percent), hours (7 percent), or wages (7 percent), in order to fund increased costs. The smallest companies were most likely to take a hit to their bottom line in order to continue providing healthcare coverage. Forty-eight percent of those companies with 1-24 employees said they would lower a profit or suffer a loss as did 48 percent of companies with 25-49 employees and 35 percent of companies with 50-99 employees. The smaller the company the more likely it was they froze or limited wage increases. Thirty-eight percent of those with 1-24 employees; 38 percent of those with 25-49 and 23 percent of those with 50-99 took this approach. Interestingly at least half of the largest companies took no action at all in the face of increased premiums. Fifty percent of companies with 100-249 and 56 percent of companies with 250+ employees were in this category. Two percent of companies took the Affordable Care Act tax credit in order to continue providing coverage. Only the smallest companies, those with 1-24 employees, took the tax credit. No larger companies took this action. How Employers Paid for Increased Premiums Lowered Profit Froze/Limited Wage Increases Delayed Investments More Productive Cut Employees 7% Reduced Employee Hours 7% 13% 12% 22% 35% Reduced Non-health Benefits 45% 7% Reduced Wages 2% Took ACA Tax Credit None 30% 9
Affording Healthcare Coverage Costs How Employers Paid for Increased Premiums by 1-24 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 25-49 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 50-99 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 100-249 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 250+ 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% Lowered profit, or suffered a loss Froze or limited wage increases Delayed/reduced business investments Became more productive/efficient Cut employees Reduced employee hours Reduced non-health benefits Reduced wages Took an ACA small business tax credit None 10
Enrollment Rates The wide majority of our member company employees are offered healthcare coverage and are reported as enrolled in those benefits. From the smallest companies to the largest those percentages are fairly uniform. Seventy-five percent of employees of companies with from 1-24 employees are eligible and covered, 74 percent of those with 25-49 employees are eligible and covered and 82 percent of those with 250+ employees are eligible and covered. Primarily large employers offer coverage to part time employees. Overall, 32 percent of part time employees are eligible and covered. Of those companies with 1-24 employees 17 percent are eligible and covered, 30 percent of employees from companies with 25-49 are eligible and covered and the largest percentage, 57 percent of those who work for companies with 250+ employees are offered coverage and enrolled. Enrollment Rates for Full Time & Part Time Employees Full Time Part Time 100% 90% 80% 70% 75% 74% 73% 80% 82% 60% 50% 57% 40% 30% 20% 30% 10% 17% 7% 7% 1-24 25-49 50-99 100-249 250+ AVG. TOTAL FULL TIME 76% AVG. TOTAL PART TIME 32% 11
Why Companies Offer Healthcare Coverage Companies clearly indicated that they offer benefits because it is important to employees and critical to attracting and retaining their employees. The highest percentage (69 percent) said they offer coverage to retain employees and the second highest percentage (51 percent) said they offer coverage to attract desired employees. Thirty-three percent indicate it was to improve health and productivity. Only 10 percent said they offered coverage to avoid the ACA penalty. When broken down by company size the numbers largely adhere to the overall percentages. The largest percentages, 64 percent for companies with 1-24 employees; 79 percent 25-49; 83 percent 50-99; 93 percent 100-249; and 94 percent 250+ all said the number one reason they offer benefits is to retain current employees. The second highest percentages, 44 percent 1-24; 73 percent 25-49; 68 percent 50-99; 83 percent 100-249; and 74 percent 250+ offer coverage to attract desired employees. EMPLOYEE RETENTION ATTRACT DESIRED EMPLOYEES IMPROVE HEALTH & PRODUCTIVITY AVOID THE ACA PENALTY OTHER 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 1-24 25-49 50-99 100-249 250+ Reasons Companies Offer Coverage 69% Employee Retention 51% Attract Desired Employees 33% Improve Health & Productivity 10% Avoid the ACA Penalty 13% Other 12
Most NJBIA Member Companies Offer Healthcare Coverage, but Cost is a Factor The results of the survey make it clear that the majority of NJBIA members plan to continue offering their employees healthcare coverage. However, rising costs threaten that coverage with those who say they are considering dropping coverage, indicating they may do so because of the cost (90 percent). Further, the majority (71 percent) of employers report they are not likely to drop coverage next year with 49 percent not likely at all and another 22 percent not very likely. A small group (7 percent) said it is very likely or somewhat likely (13 percent) that they will drop coverage. Breaking those numbers down further, the largest companies are not considering dropping coverage. Ninetythree percent of companies with 100-249 employees and 97 percent of companies with more than 250 employees indicate they are not likely to drop coverage. Discontinue Coverage VERY LIKELY SOMEWHAT LIKELY NOT VERY LIKELY 1-24 25-49 NOT LIKELY AT ALL NOT SURE 9% 44% 59% 8% 17% 22% 5% 5% 5% 27% 12% 5% Reasons Companies May Discontinue Coverage 50-99 59% 24% 90% Cost 15% Paying ACA Penalty Less Expensive 14% Administrative Complexity 14% Not Enough Employees 100-249 2% 4% 13% 80% 12% ACA Mandate Does Not Apply 3% 9% 250+ 88% 13
What Type of Plan Offered Overall 55 percent of member companies said they were likely to offer employees coverage in a health plan with an in-network Health Maintenance Organization (HMO) or Exclusive Provider Organization (EPO) only option. Fifty-eight percent of companies with 1-24 employees, 63 percent of those with 25-49, 51 percent with 50-99, 37 percent with 100-249 and 38 percent with 250+ employees offer an in-network option. Overall, 53 percent of the businesses surveyed offer a plan with an outof-network option, such as a Preferred Provider Organization (PPO) or Pointof-Service plan (POS). While approximately 46 percent of members with 1-24 employees offer a plan with an out-of-network option, this is by far the most popular option for our largest members. Seventy-one percent of companies with 50-99 employees; 85 percent of companies with 100-249 employees; and 71 percent of companies with more than 250 employees all offer a plan with an out-of-network coverage as their most preferred option. Other health plan options are offered less frequently. Overall, 24 percent of those surveyed offer a high-deductible option and 1 percent offer a feefor-service plan. 100% 90% 80% 70% 60% 50% 40% 30% 20% HMO/EPO PPO/POS HDHP Plans Companies Offer Fee For Service Other HMO/ EPO FEE FOR SERVICE OTHER HDHP POS/ PPO 55% 53% 24% 5% 1% 10% 1-24 25-49 50-99 100-249 250+ Health Plans Offered 14
Plan Selected Most Often The numbers break down a bit differently for respondents when looking at the type of health plan in which most employees are covered. Overall, the employees of 34 percent of those surveyed have selected an in-network only option (21 percent HMO, 13 percent EPO). Twenty percent of those surveyed have the majority of their covered employees enrolled in a PPO plan, 14 percent in a high deductible plan and 11 percent in a point-of-service plan. For member companies with 1-24 employees, most employees are enrolled in an in-network only plan (HMO 23 percent and EPO at 13 percent). Fourteen percent are enrolled in a high deductible plan and 11 percent in a Point of Service Plan. Those numbers are closely mirrored by the enrollments of member companies with 25-49 employees. Twenty-five percent of employees are enrolled in HMOs, 12 percent in EPOs, 17 percent in PPOs, 15 percent in high deductible plans and 5 percent in Point of Service plans. Employee Plan Selections 60% 55% 50% HMO/EPO PPO/POS HDHP Fee For Service Other 45% 40% 35% 30% 25% 20% 15% 10% 5% 1-24 25-49 50-99 100-249 250+ 15
NJBIA 2014 HEALTH BENEFIT SURVEY Voluntary Benefits Nearly one third of companies (29 percent) offer no additional benefits such as dental or prescription coverage. Further, it is clear that it is the largest companies, primarily due to their size and revenues that are offering additional benefits. Overall, 97 percent of companies with more than 250 employees offer dental benefits and 68 percent offer vision benefits, while 85 percent of companies with 100-249 employees offer dental and 61 percent percent offer vision. Of companies with 1-24 employees, only 37 percent offer dental and 19 percent offer vision while 62 percent of companies with 25-49 offer dental and 33 percent offer vision. Overall, 46 percent offer dental, 26 percent offer prescription coverage and 26 percent offer vision. Which of the following does your company offer to your employees? 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 46% DENTAL BENEFITS 26% PRESCRIPTION DISCOUNT CARD 26% VISION BENEFITS 18% FLEXIBLE SPENDING ACCOUNT 17% HEALTH SAVINGS ACCOUNT 17% HEALTH REIMBURSEMENT ARRANGEMENT 3% HOSPITAL DISCOUNT CARD 4% OTHER COMPANY SIZE 1-24 25-49 50-99 100-249 250+ 29% NONE 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 16
Wellness Ninety-one percent of companies with 250 or more employees offer some form of wellness program while smaller companies are less likely. Twenty-four percent of companies with 100-249 employees offer a fitness club reimbursement, 17 percent offer health education programs and 22 percent offer smoking cessation programs. Of companies with more than 250 employees, 38 percent offer fitness club reimbursement, 44 percent offer health education and 32 percent offer smoking cessation programs. 1-24 25-49 50-99 100-249 250+ Fitness Club Reimbursement 3% 12% 15% 24% 38% Health Education 3% 9% 12% 17% 44% Quit Smoking 2% 8% 17% 22% 32% Nutrition/Weight Mgmt Program 2% 6% 10% 13% 29% On-site health screening 0% 5% 5% 24% 50% On-Site Fitness 2% 5% 0% 13% 18% Stress Management 1% 3% 5% 2% 26% Other 2% 8% 7% 9% 21% None 91% 71% 66% 41% 9% 17
Healthcare Coverage for Union and Non-Union Employees Overall the overwhelming majority of companies (92) report having no union employees, however the larger the company the more likely they are to offer coverage to both union and non-union employees. Only 3 percent of companies with 1-24 employees offer coverage to both union and non-union employees. For the largest companies, those with more than 250 employees, 26 percent report offering coverage to both union and non-union employees. Further, companies report an average of 95 percent of their full time and 86 percent of part time employees are enrolled. Does your company offer healthcare coverage to both union and non-union employees? Yes No No Union 3% 11% 5% 97% 85% 76% 17% 7% 72% 22% 7% 68% 26% 6% 1-24 25-49 50-99 100-249 250+ AVG. TOTAL YES 6% AVG. TOTAL NO 1% AVG. TOTAL NO UNION EMPLOYEES 92% FULL TIME UNION 95% Enrollment of Full Time and Part Time Union Employees Companies which have union employees report enrolling an average of 95 percent of their full time eligible and 86 percent of their part time eligible employees. PART TIME UNION 86% 18
Healthcare Costs for Union and Non-Union Employees The average annual cost for a family plan for union employees was $17,796 for union employees versus $16,200 for non-union. A husband and wife plan cost on average $13,800 versus $12,768 for non-union. A parent child plan cost companies $11,976 per year for union employees versus $10,224 for a non-union employee and for an employee only plan companies paid about $7,236 for a union employee and an average of $6,120 for a non-union employee. Union Non-Union EMPLOYEE ONLY PARENT / CHILD $7,236 $6,120 $11,976 $10,224 HUSBAND / WIFE FAMILY $13,800 $12,768 $17,796 $16,200 19
Demographics Fairleigh Dickinson University undertook this online survey on behalf of the NJBIA. For this online poll, an email invitation was sent to the key contacts at NJBIA member companies throughout the state. The email provided a brief statement about the study and a link to the study. As a reminder, three additional e-mails were sent at approximately one week intervals from the first. In total, 583 companies completed the questionnaire. After the study was closed, the data were weighted on number of employees to match the NJBIA membership database. All online questionnaires were completed between July 25 th and August 22 nd, 2014. The majority of those who responded were reflective of the Association s membership which is overwhelmingly small businesses. More than three quarters of those responding (80 percent) were located in either north or central New Jersey. Eighty-four percent had only one New Jersey location. Lastly, respondents represented all types of businesses in the state with 24 percent offering services, 12 percent manufacturers and 12 percent construction. The largest percentage of those responding to the survey had revenues ranging from one to five million dollars (33 percent); 21 percent had revenues of less than half a million dollars; and 20 percent had revenues of more than $5 million. More than $5 million Revenue Percentage Inbetween $1-5 million Less than $1 million 20% 33% 21% Responses 80% North & Central Jersey Locations 84% Own only 1 location 20
Conclusion At a time when the health insurance landscape is changing rapidly, it is clear that New Jersey businesses are facing serious challenges as they attempt to provide their employees with important benefits that many still consider sacrosanct. The good news is that most companies still provide coverage, despite the rising cost of healthcare benefits. In most cases, members have no plans to drop coverage, and in fact, are taking steps to continue offering coverage even if it hurts their bottom line. The question is: What decisions will NJBIA member companies make in the future as costs continue to rise? For more information contact: Peter Peretzman, Vice President, Communications: pperetzman@njbia.org 609-858-9502 Christine Stearns, Vice President Health/Legal Affairs: cstearns@njbia.org 609-858-9513 21