Cost-Sharing Increasing in Employer Health Plan Designs

Employers remain committed to offering health care benefits and believe they are important to attracting talented employees. This is one of the key findings from the Healthcare Trends Institute’s (HTI) report, “2016 Healthcare Benefits Trends,” based on a survey of 250 human resources (HR) and benefits executives at companies ranging in size from 50 to more than 2,500 employees.

Employers are also exploring the benefits of wellness programs. They are worried about the impending 2020 Cadillac Tax, although they are not making any changes yet in hopes that it will be amended. In light of the Affordable Care Act, employers are also looking to insurance brokers and benefits consultants for insight into new health benefit designs.

As to what type of health benefit employers offer, the most common is from a preferred provider organization (PPO) and a flexible spending account, with both cited by 60%. This is followed by health savings accounts (HSAs) (52%), high deductible health plans (HDHP) (39%), health maintenance organizations (35%), self-insured plans (22%), health reimbursement arrangements (HRAs) (16%) and catastrophic insurance (8%).

It is most common for employers to offer health insurance at a family coverage level (cited by 73%); only 54% offer employee-only coverage level. However, 53% offer employee-plus-one coverage. A mere 25% of employers offer retiree health coverage.

Forty percent of companies are still providing employees with a choice of three or more health insurance plan options. Another 24% offer two options.

NEXT: How the Affordable Care Act has impacted health benefits

Asked how health care reform has impacted their employee benefits package, 49% say they have increased employee cost-sharing, and 40% have increased premium contributions. Every year for the past 10 years, HTI says, employers have increased employee cost-sharing.

Asked how important health benefits are for retaining and attracting quality employees, 78% said they are important to very important. In addition, 72% said health benefits are important to very important for improving employee morale, and 67% said these benefits improve employee health, reduce absenteeism and improve productivity.

Thirty-five percent of the respondents are very concerned about the 2020 Cadillac Tax. However, 61% are making no changes to their benefits in light of it. “Recent news reports along with lobbying efforts on behalf of employer and benefits groups may be influencing the 61% of companies that are deciding to continue their wait-and-see approach,” HTI says. “Employers may be watching reports on the 2017 federal budget proposal that is believed to contain changes to this aspect of the health care reform law.”

Employers continue to learn more about defined contribution plans and private exchanges, with 35% reporting they are familiar with them. This is an increase of about five percentage points from last year’s results.

Insurance brokers (40%) and benefit consultants (31%) were the top external partners that human resource executives would depend on to learn about new health benefit models, such as defined contribution health plans (DCPs) and private exchanges. As HTI puts it: “The Affordable Care Act (ACA) has created a dynamic marketplace in which brokers have a front-row seat navigating in this new era.”

If employers move to a private exchange environment, they are looking for this platform to provide many solutions such as HSAs (62%), carrier integration (58%), COBRA compliance (56%) premium automation payment (51%) and payroll integration (50%). Eighty percent of employers say their number-one priority for their employees is to provide them with plan and cost comparison tools. Employers realize that in order for the exchange environment to work well for employees, it needs to engage and educate employees through online access (69%), transparency tools (45%) and mobile applications (45%).

Employers rank several private exchange features as important to them starting with it being separate from public exchanges (83%), providing a large selection of plan choices (58%) and being provided by their current broker or benefit consultant (55%).

More than one-third of employers (35%) have a healthy lifestyle program, up from 30% last year. Another 22% said they are considering implementing such a program. More than half of the organizations surveyed (55%) are not currently offering any incentives for performing health-related tasks, while 34% are offering insurance-based wellness incentives. Eighteen percent are offering $250 or more of incentives to employees for health-related tasks.

As to how they communicate health benefits to employees, the most common form is email (72%), followed by print (47%), a company intranet (37%) and meetings with HR (32%).

Healthcare Trends Institute’s full report can be downloaded here.