Surcharges Emerging As a Way to Cut Employer Health Benefit Costs

Sharing the costs of health care with employees is a common strategy employers use to manage their costs.

According to a study from the Society of Human Resource Management (SHRM), more than three-quarters of organizations share the cost of health care with their employees for full- and part-time employees (83%) and spouses (77% for both opposite- and same-gender spouses). Less than 0.5% of employers opt to have full-time employees cover 100% of their health care costs; employers are more likely to require employees to pay all the health care costs for spouses (18%), domestic partners (23% for opposite-gender domestic partners and 24% for same-gender domestic partners) and children (18% for dependent children and 29% for non-dependent children).

In addition to sharing the cost of health care with employees, some organizations manage their costs by charging surcharges or imposing restrictions on which employee dependents are eligible for coverage, SHRM finds. Overall, approximately one-fifth of organizations have a restriction or other cost-saving measure in place for coverage of spouses and domestic partners. Most commonly, spouses and domestic partners are not eligible for health care coverage if they are covered by another entity, such as their own employer (10% for opposite-gender spouses, 9% for same-gender spouses, and 8% each for opposite- and same-gender domestic partners), and some organizations opt to impose a surcharge for coverage (9% for opposite-gender spouses, and 8% each for same-gender spouses and opposite- and same-gender domestic partners). In addition, 18% of organizations charge a higher premium for smokers.

Given the increase in the prevalence of organizations offering consumer-driven health plans (CDHPs) since 2014 (30% in 2014 vs. 40% in 2018), health savings accounts (HSAs) have also increased in popularity, with more than one-half of employers offering this benefit in 2018 (56%).

Of organizations that increased benefits offerings in the last 12 months, 44% increased their wellness benefits. Three-quarters (75%) of employers offer wellness resources and information and/or a general wellness program. Over the last year, substantial increases were seen in company-organized fitness competitions/challenges (38% in 2018 vs. 28% in 2017), CPR/first aid training (54% vs. 47%) and standing desks (53% vs. 44%). However, SHRM found preventive programs specifically targeting employees with chronic health conditions fell by eight percentage points since 2017 (from 33% in 2017 to 25% in 2018) and 17 percentage points since 2014 (42%).

More findings from SHRM’s 2018 “The Evolution of Benefits” report may be downloaded from here.