Open Enrollment Season Foreshadows Significant Changes in 2014

As employees make their open enrollment selections, they are likely to see only minimal plan changes compared to last year. However, employees can expect significant change in 2014 and beyond with mounting cost pressures, health care reform, the emergence of new network configurations, and the rapid development of new health care delivery models, according to a survey by experts at Towers Watson.

Sixty-three percent of employers expect little or no change to their health benefit plan design or employee premium subsidies for 2013. Yet 2014 promises to be a different story, with 42% of employers considering changes to plan options and 31% considering reductions in subsidization of coverage for spouses or dependents. Likewise, the percentages of companies planning to use spousal waivers or surcharges when an employee’s spouse has access to employer-provided coverage elsewhere is expected to increase moderately in 2013, but grow significantly in 2014.

The survey projects a 5.3% net increase in total health benefit plan costs after any plan changes are taken into account, increasing the average cost per active employee from $10,925 in 2012 to $11,507 in 2013. Of the 2013 total, employees will pay an average of $2,596, or 22.6%, up from $2,436 in 2012.

The year 2013 is a bridge to an emerging health care landscape, said Randall Abbott, senior health care consulting leader at Towers Watson. Employers are working to deliver greater value for each dollar spent on health care in response to continued cost escalation, the rapidly changing provider marketplace and the many provisions of health care reform. This will translate into new plan options, new approaches to care delivery, and a marked shift to narrow provider networks.

Next year, employees should be on the lookout  for new health care plan designs that encourage them to make more informed decisions or bear a greater financial burden for their healthcare. Employees will see new plans emerging with different levels of coverage based on cost or quality, new networks of high-quality providers, and new modes of care delivery, such as retail care, telemedicine, and employer-sponsored onsite health coaching. They can also expect more interactive tools for selecting medical providers and services based on price and quality. Employers will offer incentives for using high-performance networks. Employers will make employees more accountable for their personal health decisions.

Employees will get more information and choices than ever. The next few years will mark a major reshaping of how health care is delivered, said Ron Fontanetta, senior health care consulting leader at Towers Watson. The use of reward or penalties based on biometric outcomes (achieving a target BMI and cholesterol level) could skyrocket in the next two years. Thirteen percent of employers use such incentives; 9% plan to add them in 2013; and another 52% are considering them for 2014 or 2015.

Six percent of employers plan to add account-based health plans in 2013 and another 19% are considering adding them in 2014 or 2015. While 12% offer an ABHP as their only plan option, this percentage could climb to 46% by 2014.

Fifty-nine percent of employers are somewhat likely to very likely to stop sponsoring retiree medical plans for post-65 retirees in 2014 or 2015. Instead, many employers will direct retirees to private Medicare exchanges. For more information, visit towerswatson.com.

Last Updated 10/4/2017

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