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Provision covering adult children boosts health plan enrollment 2%: Mercer

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A health care reform law provision that requires employers to extend coverage to employees’ adult children up to age 26 has boosted plan enrollment by an average of 2%, according to a Mercer L.L.C. survey released Monday.

That reform law provision, which went into effect on Jan. 1 for most employers, required virtually every employer to modify its health care plan. Previously, employers typically ended coverage for employees’ children at age 18 or 19, or 23 or 24 if a full-time college student.

The additional boost in enrollment means higher costs for employers. “Employers have already been facing average increases in per-employee health benefit cost of about 6% annually for the past six years. Adding enrollment growth on top of that puts a real strain on their budgets,” Tracy Watts, a partner in Mercer’s Washington office, said in a statement.

Under the law, employers are not allowed to charge extra premiums for the expanded coverage, though they can, for example, add premium tiers.

In all, 40% of employers said expanding their plans to comply with the age-26 adult-child coverage mandate boosted plan enrollment by between 1% and 2%, while just under a quarter said enrollment rose by at least 3%, and 21% said enrollment increased by less than 1%. Fifteen percent said they were in compliance with the requirement prior to 2011.

Employers also are bracing for cost increases in 2014, when key health care reform law requirements, such as extending coverage—or be hit with stiff financial penalties—to employees working at least 30 hours a week, take effect.

For example, 28% of respondents expect cost increases of at least 3%, 27% expect costs to rise 2% or less, and 15% did not expect additional cost increases. The remaining 29% of employers said they could not yet predict the cost impact of the 2014 mandates.

Even with costs rising, only a small percentage of employers said they may terminate their plans in 2014. Similar to a much larger survey Mercer conducted last year, only 2% of employers said they were “very likely” to terminate their plans in 2014, and 6% said they were “likely” to terminate coverage.

“Employers don’t seem to have changed their minds about the value of continuing to offer employees health coverage,” Beth Umland, Mercer’s director of research in New York, said in a statement.

Of the 894 employers who participated in the latest survey, just over half have between 500 and 4,999 employees, while just under a quarter each have at least 5,000 employees or between 10 and 499 employees.