Employers Continue Health Benefit Cost-Saving Tactics

United Benefit Advisors (UBA) reveals industry trends among employer-sponsored health plans in the 2014 UBA Health Plan Survey of nearly 10,000 employers.

According to UBA, among the most striking trends revealed by the survey, employers have overwhelmingly opted for early renewals of their plans—a tactic that helped them delay adopting new Patient Protection and Affordable Care Act (ACA)-compliant plan designs for which insurance companies charge more. Premium renewal rates increased an average of 5.6% for all plans—up very slightly from last year’s 5.5% increase. This can be attributed to a nearly 322% increase in the number of plans utilizing an early renewal strategy, UBA says.

Another cost management tactic employers are using is to increase out-of-pocket costs for employees, with a “new normal” emerging for these higher cost thresholds. While average in-network deductibles remained fairly level at $1,901, out-of-pocket maximums for 2014 increased more than 6% over last year. The median single out-of-pocket maximum is $3,500 (an increase of $500), and median family out-of-pocket maximum is $8,000 (an increase of $1,000).

According to UBA, wellness program adoption seems to be in a holding pattern, as pending litigation and regulatory changes swirl on these offerings. Among employers providing wellness programs, health risk assessments and incentives are increasingly common offerings. The survey found 18.4% of all employers offered comprehensive wellness programs, which is a 0.8% decline from last year. Of these employers, 80.3% included health risk assessments, 67% offered employee incentives for participation, 63.4% offered biometric screening or physical exams, 51.9% included on-site or telephone coaching for high-risk employees, and 40.3% included seminars or workshops.

The prevalence of consumer-driven health plans (CDHPs) continues to grow—up 8% from 2012 through 2014. These plans have seen enrollment increases of more than 30% over the last two years, despite lower employer contributions to health savings accounts (HSAs), which are often used to entice participation.

According to the survey, 3.2% of employers offered a bonus to employees to waive medical coverage in 2014; this is a slight drop from 3.5% in 2013. The average annual single bonus in 2014 was $1,596, which is a slight increase from $1,524 in 2013.

Prescription drug plans are increasingly offering four or more tiers, along with ever-increasing copays—a trend UBA says might fall off as they must all eventually tie to out-of-pocket maximums under the ACA.

Overall, 11.1% of all plans are self-funded. By contrast, 80% of all large employer (1,000 or more employees) plans are self-funded. Many UBA Partners believe that self-funding will be increasingly desirable to employers of all sizes in the coming years as a way to avoid various cost and compliance aspects of health care reform. (See “Self-Funding Health Benefits Another Cost-Saving Strategy.”)

UBA finds employers typically continue to offer one preferred provider organization (PPO) health plan option to employees, while also still widely offering family coverage. Nearly half (47.8%) of all covered employees also elect dependent coverage, essentially the same for the past three years, which means that there hasn’t been a rush to drop family coverage.

Other findings from the survey include:

• The average total cost per employee in 2014 was $9,504, of which the average employer cost was $6,276 and average employee contribution was $3,228.
• Public health insurance plans have the highest average cost per employee at $11,329 (17.5% higher than average), with the lowest employee contribution of $2,040, which is 45% less than the average employee. This contribution is 39.7% lower than two years ago when public employees contributed $3,051.
• Employer cost per employee for the manufacturing, health care, construction, retail, and hospitality services sectors are all 4% to 8% lower than the overall industry average costs, making employees in these industries the least expensive to cover.
• Employees in the construction industry are among the least expensive for employers to cover, at $5,373 per employee per year, but these employees also contribute the most toward their health benefits, paying $3,620 annually, or approximately 11% higher than the average.

The Executive Summary of the 2014 UBA Health Plan Survey findings is here.