The 2010 annual enrollment season saw the opening of the floodgates regarding dependent eligibility, as employers were required under the health care reform law to extend coverage to all dependent children, regardless of student or marital status, to age 26.
Now that the annual enrollment season is behind us, employers are beginning to get a handle on the number of additional dependents who came onto their plan, and the true cost to their plans, all of which is leading to an evaluation of their approach to employee cost-sharing.
When the Patient Protection and Affordable Care Act was approved, expanding dependent coverage, employers thought, "Okay, we'll just charge older dependents more."
Then they realized the law prohibited them from charging young adults gaining coverage under the health care reform law more than similar individuals who did not lose coverage due to the end of their dependent status. There went that idea.
Employers were left to evaluate their current contribution structure and whether they should increase employee contributions for dependent coverage across the board. Most stuck with their current approach, at least for 2011.
Most employers charge their employees contributions based upon rate tiers.
Under this approach, employees pay contributions based upon whether they enroll in single, employee plus spouse/domestic partner, employee plus child(ren) or employee plus family coverage.
Someone enrolling one child pays the same employee contribution rate as someone enrolling five children.
Expanding dependent coverage to age 26 has raised the question of whether this tiered approach to employee contributions is really fair. Is it fair to charge someone with one child the same contribution cost as someone with five children?
I believe this question will begin to take center stage as employers grapple with the cost of not only expanded eligibility, but also the rising cost of health care in general.
A shift to charge employees per dependent enrolled will provide a financial incentive for adult children to consider other coverage options, while keeping employers in compliance with reform regulations.
Employers will begin to evaluate the number of dependents they had to enroll as a result of the change, and how the enrollment numbers affected their overall costs.
This will lead them to think more about how they want to structure employee cost sharing moving forward, and employers are bound to look at many different options heading into 2012 and beyond.
Contributing Editor Christy Yaccarino is on the health and welfare team of a national Fortune 500 company. She can be reached at
