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Large employers expect health benefits costs to increase 7% in 2013

BY Stephen Miller

With the cost of employer-provided health care benefits at large U.S. employers expected to rise another 7% in 2013, employers are eyeing a variety of cost-control measures including asking workers to pay a greater portion of premiums but also sharply boosting financial rewards to engage workers in healthy lifestyles, according to a new survey by the National Business Group on Health, a nonprofit association of large U.S. employers.

The survey, based on responses from 82 of the nation’s largest corporations, was conducted in June 2012.

It revealed that:

• Employers expect their healthcare benefits costs will increase an average of 7% in 2013 — the same as in 2012 but a smaller increase than employers experienced the previous three years.

• 60% expect to increase the percentage of the premium paid by employees in 2013, although most indicated that the increase would be by a small amount (less than 5%).

• 40% expect to increase in-network deductibles.

• 33% expect to increase out-of-network deductibles.

• 32% expect to increase out-of pocket maximums.

“Rising healthcare costs continue to plague employers at an alarming rate,” said Helen Darling, president and CEO of the National Business Group on Health, in a press statement. “Although cost increases have stabilized somewhat, they are still on a higher base from last year and are simply not sustainable, especially when our nation’s economy and workers’ wages are virtually flat and everybody is struggling.”

As a result, “HR leaders need to keep the pressure on to control health care cost increases, increase consumerism and individual accountability, use all of the tools and resources available to empower consumers to be wiser purchasers and support them to choose healthier lifestyles,” Darling advised.

Cost-curtailing strategies

While many employers continue to adopt cost-sharing provisions, survey respondents now consider consumer-directed health plans (CDHPs) and wellness initiatives to be more effective at stemming costs than shifting costs to employees. According to the survey:

• 43% of respondents cited a CDHP as the most effective cost control tactic, followed by wellness programs (19 percent).

• Just 9% reported increased employee cost-sharing as the most effective tactic, whereas a year earlier cost shifting was cited as the most effective measure.

Increasing wellness initiatives

The survey found that employers — in their efforts to engage employees in healthy behaviors and lifestyles — continue to experiment with and perfect the best ways to incorporate financial incentives into wellness programs. While nearly half of respondents (48%) use incentives to encourage participation in programs, more employers are basing incentives on specific health outcomes:

• 44% provide an incentive based on tobacco-use status.

• 29% base awards on achievement of outcomes such as body-mass index (BMI) or cholesterol levels.

• Just under one-quarter of respondents (22%) take a different approach — applying surcharges to employees for not participating in certain programs.

The survey reported that employers plan to sharply increase the incentive amount for maintaining a healthy lifestyle or participating in a wellness program. Among employers that offer incentives:

• The median amount employees can earn will jump 50% from $300 in 2012 to $450 in 2013.

• The median incentive amount that dependents can earn is expected to increase from $250 to $375.

Changes under healthcare reform

Respondents were asked what changes they made or are planning to make as regulations from the Patient Protection and Affordable Care Act (PPACA) continue to come into effect. The survey found the following:

Annual benefit limits: For plan years beginning on or after Jan. 1, 2014, group health plans may not establish annual dollar limits on essential health benefits. Annual limits may not be less than $2 million on or after Sept. 23, 2012, to Jan. 1, 2014. Half of all survey respondents indicated they no longer have any annual benefit limits in place. Among employers making changes for 2013, the most common benefits requiring adjustments to their annual limits were mental health and substance abuse (cited by 9% of respondents) and rehabilitative services and devices (also cited by 9%).

Grandfather status: A grandfathered health plan isn’t required to comply with some of the consumer protections of the PPACA that apply to other health plans that are not grandfathered. The majority of respondents (57%) no longer had any health plan options in grandfather status in 2012, compared with 49% in 2011.

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

Have HR-related questions and concerns? Get access to essential forms, policies and guides, plus a live call center, at ToolkitHR.com, powered by HCN and the Society for Human Resource Management (SHRM).

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Lowe’s stumbles in second quarter

BY Ken Clark

Mooresville, N.C.-based Lowe’s posted declines in net sales, comp-store sales and earnings in the second quarter ended Aug. 3.

“Our results fell short of our overall expectations,” said Robert Niblock, Lowe’s chairman, president and CEO. “However, I have confidence in our strategy and in our employees, and while we recognize the significant magnitude of change that we’ve asked the organization to absorb as we transform our business, we fully understand that we must improve our level of execution.”

The world’s second largest home improvement retailer posted sales of $14.2 billion in the quarter, down 2.0% from $14.5 billion in the same quarter last year. Comp-store sales in the quarter were negative 0.4%.

Earnings of $747 million were down 10.0% from the same quarter a year ago.

The quarterly comparisons in 2012, which is a 52-week year, are impacted by a shift in comparable weeks, the company said. For the six-month period, comparable-store sales increased 1.0%

As of Aug. 3, 2012, Lowe’s operated 1,748 stores in the United States, Canada and Mexico, representing 196.8 million sq. ft. of retail selling space.

That compares with rival Home Depot’s store count of 2,255 stores. Last week, Home Depot reported gains in comps and sales and a double-digit percentage gain in net earnings.

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IPG launches weather barrier for building industry

BY Brae Canlen

Intertape Polymer Group (IPG) has introduced a new line of weather-barrier products for the construction industry. The portfolio consists of NovaWrap building wrap, NovaSeal roof underlayment and NovaFlash self-adhered flashing, along with a full line of complementary tapes, including Intertape Sheathing Tape.

Together, the products comprise IPG’s Total Moisture Control System, engineered to work together to deliver energy efficiency, durability and optimum moisture management, while ensuring superior contractor and owner satisfaction.

IPG’s building products, which have undergone third-party technical evaluation for code compliance by ICC-ES, can also help specifiers meet municipal, state and national building codes. Used properly, they can contribute green building credits LEED, Energy Star and other green building programs.

Although IPG building products have been available in North America since 2010, the company has launched a major introduction of its brand for the first time to builders, contractors and specifiers via a promotional campaign.

“We’re investing in the IPG brand and demonstrating the company’s commitment to the building and construction markets,” said James Apap Bologna, VP marketing and corporate communications “We see it as an important way to add value to our customers’ businesses by raising our awareness as a manufacturer. We also want the market to know that our product offerings extend far beyond tapes.”

Based in Montreal and Bradenton, Fla., IPG also manufactures lumber wrap, HVAC tapes and other building products available from major dealers, distributors, leading home improvement stores and retailer-owned hardware cooperatives.  

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