Employers Will Change the Way They Deliver Health Benefits

Ninety-five percent of employers that provide health care benefits to active employees and retirees plan to continue doing so for the next three-to-five years. But they will change the way the benefits are managed and delivered, according to a survey by Aon Hewitt,

Almost 40% of employers expect to require employees to take a more active role in their health by offering them a few plan options, plus initiatives designed to improve health and reduce costs. Thirty-three percent say that the preferred approach in the next three-to-five years will be to offer group-based health benefits through a private health exchange.

The following is a breakout of employer strategies:

* Require employees to take a more active role in their health by offering them a few plan options, plus initiatives designed to improve health and reduce costs — 40% now and 36% in three to five years.

* Move to a private health exchange – 5% now and 33% in three to five years.

* Exit health care completely — 1% now and 5% in three to five years.

* Maintain traditional trend mitigation approaches — 52% now and 21% in three to five years.

Almost two-thirds of employers plan to continue offering the same level of benefits to part-time employees as they do to full-time employees, with or without an employer subsidy. Just 38% plan to offer no benefits to part-time workers in the next three-to-five years.

Twenty percent favor moving all or a portion of their pre-65 retiree population to the individual market/state exchanges in the next three-to-five years. Just 3% of employers do so today.  Employers will be moving at least some portion of their pre-65 retiree populations to state and federal exchanges, but they are waiting for the marketplaces to become more competitive and mature. John Grosso of Aon Hewitt said, “This movement will be slow and methodical as the public marketplaces evolve and as employers understand the implications of the 2018 excise tax, which will only affect group-based health insurance plans.”

The number of employers offering subsidized retiree health benefits has declined over the past decade, with just 25% of large employers doing so today, compared to about 50% in 2004.  A growing number of companies that offer health benefits to post-65 retirees are considering providing coverage through the individual Medicare plan market. In fact, 30% of companies have already sourced benefits through the individual market –most through a multi-carrier private health exchange. Two-thirds of employers that are considering changing their post-65 retiree strategies are considering this approach.

A growing number of employers are leveraging multi-carrier private exchanges for Medicare beneficiaries. They see the value in having the competitive mix of plans, the navigational tools, and the advocacy that these private exchanges offer. Winkler said, “As health insurers regain control for creating a competitive market that is accountable to the consumers within it, we expect to see similar cost moderation across the system, including the new competitive markets emerging for pre-65 retirees and active employees.” For more information, visit www.aon.com.

Last Updated 09/23/2020

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