Employers adjust health benefit strategies in wake of reform

Many employers are making changes to their health plans as a result of health care reform coverage mandates, according to the International Foundation of Employee Benefit Plans’ "2013 Employer-Sponsored Health Care: ACA’s Impact" report.

Key findings from the survey of more than 950 U.S.-based employee benefits professionals include:

• Employers’ confidence in their sponsored health care plans increased year to year, but many organizations are planning to modify their plans because of effects from implementing the Patient Protection and Affordable Care Act (PPACA).

• The vast majority of employers (90%) have moved beyond a wait-and-see mode and are actively developing tactics and taking steps to deal with new rules and regulations stemming from the new health care reform law.

• For the first time, employers were more likely to say their top focus is developing tactics to handle implications of the PPACA.

Sixty-nine percent of employers will definitely continue to provide employer-sponsored health care when health exchanges begin operating, in 2014—a 23-point increase from 2012 (46%). Another quarter of respondents are very likely to continue their employer-sponsored health care plan. 

Increasing cost-sharing

Nearly one in five (18%) employers has already increased participants’ share of plan premiums, and an additional quarter of respondents plan to increase the portion that employees pay for their premiums over the next year. Of those employers planning to make changes, one in four is increasing its emphasis on high-deductible health plans (HDHPs) with health savings accounts (HSAs), while another 14% are assessing the feasibility of adding one.

Companies are also encouraging healthy behavior in employees, with 19% developing or expanding organized wellness programs within the past year. Additionally, within the past year, 14% of employers adopted or expanded the use of financial incentives to encourage healthier lifestyles; another 25% intend to do so in the next year.

More organizations are redesigning their plans to avoid the 2018 excise tax on high-cost or so called Cadillac plans. In 2011 only one in 10 companies indicated it was redesigning its plan to avoid the additional tax, but a steady increase over the past two years means that that number will likely soon double.

Focusing on compliance

Similar responses to health care reform were revealed in a series of roundtables with mostly large employers, held in New York, Chicago and Atlanta by consultancy PricewaterhouseCoopers (PwC). In the wake of PPACA implementation, “employers are confronting broader strategic considerations relating to health coverage for their employees,” stated PwC’s May 2013 report on the roundtable findings, An HR Perspective: Focusing on the Future of Healthcare Benefits.

Compliance and reporting requirements were the biggest concern of about 15% of roundtable participants. “Overall, participants had a broad awareness of the issues involved, but there was some confusion about the existence of some of the requirements and how they work and many questions about the details,” the report noted. For example, “New rules will limit out-of-pocket maximums in most plans starting in 2014, but many employers were unaware that co-payments must count toward those maximums, or that it will be difficult to administer the requirement to have co-payments (generally imposed when a patient receives a medical service) apply to the out-of-pocket maximum.”

Nearly half (41%) of roundtable attendees considered “bringing health care consumerism ‘mainstream’” (by offering high-deductible plans with health savings accounts and by educating employees on their use, for instance) and improving participation in wellness and health management programs to be the two highest priorities or changes for their health benefit strategy going forward.

Options for replacing employer-sponsored coverage and paying penalties were still too new for most employers to seriously consider them for their active employee population, the roundtables revealed.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

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