ADP Study Finds Income a Factor in Benefits Participation

 In a new study by the ADP Research Institute, the benefits administration provider found that benefit participation rate patterns for 2012, if continued over the next year, will predicate a wave of newly eligible employees opting to remain uninsured due to the perception that insurance is too significant of a portion of their annual income. The study found that employees with wages over 400 percent of the federal poverty level, approximately $45,000 for single individuals, participate in health coverage at a rate of 81 percent. The further below the 400 percentile rank incomes fall, the closer participation rates fall to a low of 37 percent; a rate reached by those earning between $15,000 and $20,000 per year.

“While no one can predict the future, the ADP Research Institute findings suggest that lower income employees may avoid participation in a health plan that consumes a significant percentage of their income,” Tim Clifford, president of ADP Benefits Administration Services, said. “Clearly, employer to employee communications will be essential in explaining the options moving forward.”

Other findings uncovered by the survey included:

• About 8.6 percent of full-time, single employees pay at least 9.5 percent of their earnings for health care coverage. However, for a subsection of lower-income employees, nearly 25 percent spend over 9.5 percent of their wages on health coverage.

• Employees with an annual salary of at least $22,340 might still find it beneficial to obtain employer-sponsored group coverage over a public health exchange.

“While many project that the impact of the ACA will be most significant upon small businesses, certain industries, such as retail, hospitality, construction and business services, could face a dramatic increase in the number of employees that are newly eligible for health benefits,” Clifford said. “In some cases, employers could face a sharp increase in the number of covered employees and subsequent costs, and if they choose to stop offering employer-sponsored benefits, they may face a significant tax penalty.”