Employers Remain Committed to Health Benefits

Following the U.S. Supreme Court decision on health care reform, 88% of employers will continue offering health care benefits for the foreseeable future, according to a survey surveyed by Towers Watson. That’s up 17% from 2011.The survey includes 440 midsize to large companies.

Employers remain committed despite the fact that employee health care costs are expected to increase 5.3% in 2013. There is uncertainty about the November elections, the development of insurance exchanges, and the rapidly evolving health care delivery system.

About two-thirds of companies say the Supreme Court’s decision has affected their health strategy. However, one-third are waiting for the upcoming elections or the opening of insurance exchanges before making any significant changes to their health care strategy. In fact, 72% are not confident that the exchanges will be a viable alternative for active employees by 2015.

Relatively few companies are likely to direct active employees to exchanges in the near term, but the story for retirees is very different. Nearly six out of 10 of companies with a program are somewhat to very likely to stop sponsoring retiree medical plans for post-65 retirees and 64% plan to stop sponsoring these benefits for pre-65 retirees.

Although health care cost increases have slowed (5.3% projected for 2013 compared to an expected 5.9% this year), 58% of employers expect to trigger the health care reform excise tax in 2018 if they don’t change their benefit strategy. As a result, 83% of employers are planning steps to control their costs to avoid the tax. The $11,507 total cost represents an employer cost of $8,911 per employee and an employee cost of $2,596 per employee. While the increase in employee cost sharing is modest, it outpaces average merit increases.

Companies are planning or considering the following:
• 63% change plan options.
• 42% increase employees’ cost share by 1% to 5%.
• 38% reduce subsidization of coverage for spouses and dependents significantly.
• 29% use spousal waivers or surcharges
• 13% increase employees’ share of health care of premiums in 2013 by 5% or more.

Seventy-seven percent view health care benefits as core to their employee value proposition over the next several years and more than one-third of companies will examine their health care benefit in a total rewards framework by 2013. Another 39% are considering doing so by 2014 or 2015.

The strong growth of account-based health plans (ABHPs) is expected to continue. By 2015, 80% of employers plan to offer an ABHP, up from 61% in 2013. The enrollment within ABHPs continues to increase significantly, moving from single-digit numbers of employers offering these plans in 2006 to an expected 30% in 2013.

Seventeen percent of employers plan to make telemedicine available to employee by 2013 and another 27% are considering offering it by 2014 or 2015. For more information, visithttp://www.towerswatson.com

Last Updated 05/25/2022

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