Employers Strive to Help Employees Gain Financial Wellness

Sixty-one percent of employers have adopted consumer directed health plans, which provide a personal savings account to offset employee’s deductibles. Employers are expanding health and wellness programs, or implementing cost sharing for some benefits, according to a survey by Prudential.

Brokers say that their roles are being affected by rising healthcare costs and healthcare reform, changing regulations, expanding web technology, and rising competition from non-traditional players. They say that their most important business objectives are retaining customers, increasing productivity and efficiency, and increasing customer satisfaction. Most employees say that voluntary benefits increase the value of their benefit program, even if the employee doesn’t participate. This varies by generation, with a greater percentage of Millennials finding value.

HSAs top employers’ lists of tax-exempt benefits

Employers responding to a recent survey said offering a consumer-directed health plan is the best way to control health care costs, and employees benefit because contributions to CDHP-linked health savings accounts are tax-deductible, as is interest accrued in the accounts. Other popular tax-deductible benefits include education assistance, commuting benefits and achievement awards. Entrepreneur online (2/24)

Why Employees Should Consider Self Funding

Mid-sized employers should consider self-funding employee benefits, move to a private exchange or establish a defined contribution approach to control health care costs over the next decade, according to a new white paper by Barney & Barney, a Marsh & McLennan Agency LLC Company. Employers will bear an even bigger share of the cost

Shawn Pynes, Principal of Barney & Barney’s Employee Benefits division. Benchmarking data in white paper is based on responses from more than 330 employers and 1,084 benefit plans in the U.S. The following are key findings:

• PPO plans are the most costly to employers and employees. The employee-only premium is now more than $600 per month on average. Employees are responsible for $168 of that amount on average.
• Over the past three years, office visit copays have been creeping up for PPO and HMO plans. Copays have risen from an average of $19 to $21 for PPOs and from $20 to $22 for HMOs years.
• Employers are offering more low-cost options, including HMO plans and CDHPs. The number of HMO plans offered jumped 15% from 2013 to 2014. CDHP implementation grew by 13% over the same time period, compared to just 4% with PPO plans.
• The average copay for an emergency room visit has increased steadily over the past few years across PPO and HMO plans at $119 per visit.

Consumer-Driven Health Plans Grew 15% Last Year

Enrollment in consumer-directed health plans (CDHPs) grew by 15% in 2013, according to a survey by the American Association of Preferred Provider Organizations (AAPPO). Enrollment in the plans, which include health savings accounts, health reimbursement arrangements and flexible spending accounts, grew from 39 million in 2012 to 45 million in 2013, according to an AAPPO analysis of a Mercer survey. As major changes to the health system loomed last year, employers looked to consumer-directed health plans to offer the affordability, flexibility, and stability,” said Karen Greenrose, AAPPO president and CEO. The following are key findings:
• 23% of employers offered CDHPs last year – up from 22% in 2012.
39% of large employers (500 or more employees) offered CDHPs in 2013 – up from 36% the year before.
• 23% of small employers offered CDHPs – up from 22% in 2012. 63% of the largest employers (more than 20,000 employees) offered CDHPs in 2013 — up from 32%.
• 35% of employers expect to offer CDHPs in 2016, with 64% of large employers expecting to offer them.
• The increase continues represents a more than doubling of employers that offer CDHPs since 2008 – from 10% in 2008 to 23%. For more information, visit: http://aappo.org/Resources/Research.aspx.

Survey: Consumer-directed health plans encourage cost-conscious behavior

People enrolled in health plans with high deductibles and linked to a health savings or reimbursement account are more likely than those in traditional plans to check their benefits, request a generic drug in place of a brand-name drug, and check the price before getting care, according to a survey by the Employee Benefit Research Institute and Greenwald & Associates. Enrollees in consumer-directed plans were also more likely than those in traditional plans to discuss treatment options with their health care providers, the survey found. BeckersHospitalReview.com (12/20)

Most Employees Will See Changes in Health Benefits During Open Enrollment

Employees can expect a number of changes to their health benefits driven by rising health costs and the Patient Protection and Affordable Care Act, according to a report by Aon Hewitt. The following are some of the most notable changes employees may see:

A more expensive price tag: Most employers plan to subsidize employees’ health coverage at the same percentage rate as last year. However, employees’ out-of-pocket costs continue to climb as health care costs increase. In addition, nearly 20% have increased surcharges for adult dependents with access to coverage elsewhere.

More options for coverage: Starting in 2014, all Americans must have health care coverage or risk paying a penalty. Some employees may want to purchase individual coverage through the new state and federal marketplaces, particularly those who are not offered health coverage through their employer.

A higher probability of being in a consumer-driven health plan: Consumer-driven health plans (CDHPs) continue have surpassed HMOs as the second most offered plans by employers. In fact, a growing number of employers are offering CDHPs as the only plan option. While just 10% of companies do so today, another 44% are considering it in the next three to five years.

Programs that promote health awareness and education: More employers will offer programs that encourage employees to take a more active role in managing their health. For example, 75% of employers offer health-risk questionnaires and 71% offer biometric screenings such as blood pressure and cholesterol.

More incentive opportunities for exhibiting healthy behaviors: More employers will providing a reward or a penalty for completing or failing to complete programs, such as health-risk questionnaires and biometric screenings. Eighty-three percent of employers have such an incentive in place now.

New eligibility rules: Employers may change the rules that determine which employees are eligible for health coverage, particularly as they evaluate requirements of the employer mandate provision the ACA, which was delayed until 2015. In addition, the recent Supreme Court decision that resulted in federal recognition of same-sex marriages may mean more dependents will now be eligible for benefit coverage.

Craig Rosenberg of Aon Hewitt said, “Employees typically spend very little time choosing their health benefits each year…In some cases, not making an active decision during enrollment means employees could get defaulted into a health care plan that doesn’t meet their needs or leaves them and their families with no coverage at all. It’s up to employees to read the fine print and take an active role in understanding if and how these changes may impact them.” Aon Offers the following open enrollment tips to employees:

• In most cases, if your employer offers coverage that meets certain minimum coverage and cost levels, you are not eligible for a subsidy in the exchange. Most employers subsidize the coverage they offer and allow you to pay for it on a pre-tax basis, which saves you money by lowering your taxable income. Coverage purchased through the exchange is not pre-tax. You can visit healthcare.gov to learn more about the exchanges.

• When evaluating CDHPs, figure out how much you are likely to spend in out-of-pocket costs. Also factor in how much your employer will put into your HRA or whether they will make contributions to your HSA. Forty-four percent of employers that offer CDHPs subsidize premiums at a higher rate than other plan options. Many employers also couple these plans with health reimbursement accounts (HRAs) or health savings accounts (HSAs), which you can use to help pay for eligible out-of-pocket health care costs.

• HSAs allow you to save money by contributing up to $3,300 for individual coverage in 2014 and $6,550 for family coverage on a pre-tax basis, with no use it or lose it rule.

• Before open enrollment, look back at how much you’ve spent out-of-pocket for deductibles, co-pays, and co-insurance. Also look at the number of doctor visits you typically make and the cost of regular prescription drugs. Most employers offer online tools and modelers to help you calculate your prior expenses and estimate your future health care needs.

• If you are participating in a health care flexible spending account (FSA), evaluate if your contribution is too little or too much, based on your actual and anticipated expenses. Remember that you must use any money in an FSA within the year or risk losing it. If you plan to enroll in a CDHP with an HSA, ensure that you understand how your health care FSA is impacted as special rules apply. For example, the health care FSA may be limited to covering dental and vision care expenses.

• Most employers offer tools, such as health risk questionnaires and biometric screenings, and some offer financial incentives for participating.

• Consider any supplemental benefits your employer may offer. Aon Hewitt’s research shows that 28% of employers include access to voluntary supplemental coverage, such as critical illness and hospital indemnity insurance, as part of their annual enrollment process. Often, this extra coverage is available at a lower cost through your employer than if you were to purchase it on your own.

• Look at your health and financial wellbeing, including health care, income protection (For example, life and disability insurance), and retirement planning. Does your spending reflect your needs and priorities? For example, if you aren’t contributing to your 401(k) plan, now may be the time to start. Beginning to save earlier in your career helps to ensure you’re on track to meet your long-term savings goals.

For more information, visit www.aonhewitt.com.

Consumer Directed Health Plan Enrollment Surges in 2012

Enrollment in consumer-directed health plans (CDHPs) grew 19% in 2012, according to a Mercer survey commissioned by the American Association of Preferred Provider Organizations. The survey reveals the following:

• 36% of large employers (500 of more employees) offered CDHPs in 2012, up from 32% from the year before.
• 22% of small employers (under 499 employees) offered employees a CDHP option, up from 20% in 2011.
• 59% of the nation’s largest employers (20,000+ employees) offered CDHPs in 2012, up from 48% the year before. Additionally, 62% of these employers expect to offer CDHPs in 2013 and 68% by 2018.

Sixteen percent of all employees with employer-sponsored plans chose CDHPs in 2012 – showing a larger enrollment growth than any other type of insurance plan. This trend corresponds with a slight, but steady decline in HMOs over that same period.

Karen Greenrose, AAPPO president and CEO said, “It’s clear that employers – especially our largest ones – are increasingly looking to…consumer-driven health plans, which are predominantly built on well-established PPO networks, offer affordability, choice, access, and stability that employers and consumers are looking for in this uncertain environment.”

Last year’s increase continues a steady growth trend that started in 2008 (7% increase) and continued through 2011 (13% increase). That trend is likely to continue in the near future as well, with 40% of employers of all sizes expecting to offer a CDHP in the next five years.  For more information, visitwww.aappo.org

Are Smarter CDHP Consumers a Myth?

Consumer Driven Health Plans CDHPs do not stimulate price shopping for most common outpatient services, according to a survey by the independent Berlin-based publishing group, De Gruyter. For eight out of nine services analyzed, prices paid by CDHP and traditional plan enrollees did not differ significantly. The only exception is that CDHP enrollees paid 2.3% less for office visits.

There was no evidence that consumers with CDHP plans who had lower than expected medical expenses did more price shopping or that consumers did more price shopping before reaching the deductible. Patients may be returning to the same providers they used before meeting their deductible or they are not sensitive to this within-year change in the price. Consumers may not have been able to shop for some diagnostic services if the service was bundled with a physician visit. Also, a patient’s physician may always use a particular facility for such services. There may be a limited scope of low-cost providers. Other studies have shown that the price transparency of health services is low; and early state-level efforts to improve price transparency have shown little effect so far .

The authors say that the findings should be viewed in light of the study’s limitations. For example, traditional plans may be able to negotiate a lower price point for a larger share of their providers. Also, a traditional plan may have larger networks with many providers offering the same relativly low price point. This would make low price providers the default option for many traditional plan enrollees, whereas CDHP enrollees may have a harder time finding prices at the lower end of the distribution. Second, the study only looks at price outcomes, but not quality. So CDHP enrollees may make value-based decisions using quality outcomes that researchers did not observe.

Price shopping may not be an immediate response to enrolling in a CDHP plan, perhaps because patients don’t  perceive the degree of price variation. A key to encourage price shopping may be the availability of clear signals of price, such as generic drugs, or out-of-network providers. Another important determinant of price shopping may be repeated use of a service. The researchers say that giving enrollees more education about benefit designs and launching carrier specific, price and quality transparency initiatives may be the next steps for employers, health plans, and policy makers to increase consumerism in health care decision-making. For more information, click here.

Consumer Driven Plans Gain Popularity In Private Exchanges

During the 2013 annual enrollment period, 39% of those who enrolled in Aon Hewitt’s multi-carrier private health care exchange chose a consumer-driven health plan (CDHP), up from 12% in 2012. Conversely, the number of employees who enrolled in a PPO-type plan decreased from 70% in 2012 to 47% in 2013. For 2013, 32% of employees chose a similar type of plan their existing coverage such as a PPO for example. Twenty-six percent chose richer coverage. Forty-two percent reduced their payroll contributions and selected a less rich form of coverage.

Sixty-eight percent 68% of exchange enrollees used a health plan comparison tool compared to just 48% of employees who completed a traditional enrollment with Aon Hewitt. In addition 57% of exchange enrollees used the provider search tool compared to only 14% of traditional-plan enrollees. For more information, visit www.aonhewitt.com.

Why CDHPS Are Flourishing

In the face of another year of economic volatility and legislative and regulatory change, Cigna’s consumer-driven health plan (CDHP) participation grew by 26% during 2012, resulting in one-in-five customers now participating in a Health Savings Account (HSA) or Health Reimbursement Account (HRA). Cigna president and chief executive, David M. Cordani said, “The growth of consumer-driven health plans continues because they help customers reduce their health risks and improve the quality and efficiency of their care, which results in lowering their total medical costs.” When compared to customers in traditional PPO and HMO plans, those in a CDHP achieved the following:

 They Lowered their health risks: When employers transitioned to only offering a CDHP, people improved their health risk profile by 12% in the first year compared to customers in a traditional plan.
• They reduced total medical costs: Cigna’s CDHP medical cost trend was 13% lower than traditional plans during the first year: costs were 20% lower for HSA customers and 11% lower for HRA participants. Cost reductions were achieved without employers shifting out-of-pocket health expenses to their employees. Seventy-five percent of HSA customers contribute more to their accounts than they spend.
 They became more engaged in health improvement: CDHP customers are twice as likely to complete a health risk assessment and those with a chronic illness are up to 25% more likely to participate in a disease management program than those enrolled in a traditional plan.
• They were more likely to compare cost and quality: CDHP customers were 59% more likely to use the directory to access cost and procedure information to help them review potential medical costs.
• They became more savvy health care consumers: Customers with Cigna Choice Fund plans and Cigna pharmacy benefits were more likely to choose generic medications compared to those in a traditional plan. In addition, CDHP customers used the emergency room at a 6% less than did people enrolled in HMO and PPO plans.
• They Received higher levels of care: CDHP customers had consistent or higher compliance with over 300 evidenced-based medical best practices than did their counterparts in traditional plans. CDHP customers also sought preventive care more frequently than customers enrolled in a traditional plan.

Last Updated 09/22/2021

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