70% of House Supports Repealing the Cadillac Tax

Three hundred members of the House of Representatives signed on to legislation to repeal the Cadillac tax. Rep. Frank Guinta (R-NH) introduced H.R. 879, and Rep. Joe Courtney (D-CT) introduced H.R. 2050. The number of cosponsors signifies that nearly 70% of members in the House support the effort to repeal the Cadillac Tax. Congressman Frank Guinta (R-NH) said, “One way or another, the Cadillac Tax will meet its end. Three hundred cosponsors of legislation to permanently ax the tax is a milestone.”

The Cadillac Tax is a 40% tax on the cost of employer-sponsored health coverage that exceeds certain benefit thresholds – initially, $10,800 for self-only coverage and $29,100 for family coverage in 2020. More than just premiums are counted when determining the cost of the plan. The cost of wellness programs, on-site clinics and other plan features designed to reduce plan expenses are also included, so virtually everyone in an employer-sponsored plan would be affected. James Klein, president of the American Benefits Council, said “This tax does not just affect high value plans. It will hit workers, retirees, and families with ordinary coverage who have the misfortune to suffer catastrophic health events or have chronic conditions that are expensive to treat.”

Consumer-Driven Health Plans Gain Ground

Thirteen percent of the privately insured U.S. population was enrolled in a consumer-driven health plan (CDHP) in 2015, according to a report by the Employee Benefits Research Institute. Sixty-three percent of those enrolled in CDHPs had an HSA; 13% had an HRA, and 24% had the option of an HSA-eligible health plan, but had not opened an HSA.

Manufacturing Leads Adoption of High-Deductible Health Plans

Manufacturing

A survey by Benefitfocus reveals distinct differences in benefit offerings among manufacturing, education, and health care industries. Manufacturing leads the adoption of high-deductible health plans (HDHPs), education favors traditional plans (PPOs, HMOs, etc.) and the health care industry offers the most voluntary benefits. Manufacturing is the only industry of the three, in which more companies offer a combination of HDHPs with traditional plans than traditional plans only (48% to 46%). Manufacturing employees selected an HDHP over a traditional plan 46% of the time. The findings suggest that manufacturing employers have an opportunity to encourage employees to participate in health savings accounts (HSAs) or flexible spending accounts (FSAs) to cover higher out-of-pocket costs associated with HDHPs. Only 23% of education employers offer at least one HDHP. Traditional health plans dominate the mix of benefits. HMOs made up 44% of employee enrollments, which suggests an opportunity to offer a wider range of lower cost benefit options for a multi-generational workforce.

Employees in the health care industry face high deductibles regardless of plan selection, but are better equipped to cover unexpected medical costs with voluntary benefits (including critical illness, accident, and hospital-indemnity insurance). Health care employers offered gap products at the highest rate of the three industries at 12 percentage points above the average. Nearly half of health care workers selected a voluntary plan when given the choice.

Exchange Consumers Are Becoming Savvy Shoppers

People who get health insurance through the public health insurance exchanges are increasingly confident about their ability to afford coverage. Also, they are just as satisfied with their coverage as are people with employer coverage, according to a Deloitte Consulting survey. Seventy percent of exchange consumers were able to manage their out-of-pocket expenses in the past year and only 25% had higher out-of-pocket costs than expected. However, lower-income people had a hard time paying for out-of-pocket costs.

Greg Scott of Deloitte said, “Health care consumers’ expectations for information and transparency are increasing, as is their interest in intuitive tools to access relevant information. Meeting these expectations should lead to increasingly more confident and satisfied customers.” Paul Lambdin of Deloitte said, “Out-of-pocket costs… are making exchange consumers pay close attention to the details of their coverage and changes in benefits and premiums.”

Knowing what costs to expect could also be increasing confidence. More exchange consumers understand the costs of their coverage than do people with employer insurance. Sixty-one percent of exchange consumers look at the total costs – not just premiums – when evaluating coverage options.

Also, more exchange customers are willing to accept network tradeoffs for lower payments than in 2015. These tradeoffs include a smaller network of hospitals (27% in 2016 as compared to 18% in 2015), a network that does not include their primary-care provider (26% in 2016 as compared to 16% in 2015), and a smaller network of doctors (26% as compared to 18% in 2015).

Sixty-six percent of exchange consumers used online tools to compare out-of-pocket costs compared to 58% of consumers with employer coverage. Scott said, “Exchange consumers continue to shop around for coverage and evaluate costs before making decisions and appear to be responding to messages about going online to look for health insurance information.”

Employment-based Health Coverage Holds Steady

Although health insurance coverage rates are rising, the percentage of Americans with employment-based coverage remains unchanged, according to a report by the Employee Benefits Research Institute (EBRI). In 2014, 88% of non-elderly people people were covered, up from 84.6% in 2013. Twelve percent of people under 65 were uninsured in 2014, down from 15% in 2013. Among the entire population, 13% had individual coverage in 2014 compared to 9% in 2013. There was no change in the percentage of the non-elderly population with coverage through an employment-based health plan. More people were covered by employment-based coverage in 2014 than in 2013 because of population growth, but the percentage with employment-based health coverage was unchanged at 62%.

Study Reveals Leading Healthcare Benefit Trends

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The Healthcare Treds Institute issued a massive survey of employee benefit trends. The good news is that employers are looking to insurance brokers and benefit consultants to help them evaluate health benefit designs and distribution models. Forty percent of employers say they will depend on insurance brokers to learn about new health benefit models, such as defined contribution plans and private exchanges, and 31% will depend on benefit consultants. Nearly 40% rely on insurance brokers to learn about health benefit designs and platforms.

“The ACA has created a dynamic marketplace in which brokers have a front row seat navigating in this new era,” according to the study. Human resource professionals have new responsibilities due to the ACA. Thirty percent are looking for help from benefit consultants. However, 30% are researching independently compared to 26% in the previous year. Employers gave the following answers to this question, “What partners would you depend on to help you learn about new health benefit designs and distribution models?”

  • Insurance broker 39.7%
  • Will research independently 30.8%
  • Benefit consultant 30.8%
  • Insurance carrier 24.4%
  • TPA 19.2%
  • None 15.4%
  • Trade Association 11.5%
  • Payroll company 10.3%
  • Other 5.1%

What Benefits Employers Are Offering

About 40% of employers offer three or more health plan options, which are usually a PPO, an HDHP, and an HMO. Employees are choosing HDHPs (39%) over HMOs (35%). The following is a breakdown of benefits that employers offer:

  • PPO 59.5%
  • Flexible spending account (FSA)59.5%
  • Health savings account (HSA) 52.1%
  • High deductible health plan (HDHP) 38.8%
  • HMO 34.7%
  • Self-insured plan 22.3%
  • Health-reimbursement arrangement (HRA) 15.7%
  • Catastrophic insurance 8.3%
  • Dental plan 73.6%
  • Vision plan 67.8%
  • Prescription drug coverage 67.8%
  • Mental health coverage 52.1%

How Healthcare Reform Has Affected Employee Benefit Packages

Forty-nine percent say that healthcare reform will increase employee cost-sharing; 39.6% say it will increase premium contributions, and 3.6% say it will shift their company towards a defined contribution plan. Employee cost-sharing has risen every year for 10 years. Employers and the medical industry have had to deal with other ACA implications, such as the employer mandate and new compliance, which has caused an increase in capital and human resources. Employers have done the following in response to health reform:

  • Increased employee cost sharing 49%
  • Has had no effect 30%
  • Enhanced wellness/preventive health programs 23%
  • Increased employee engagement in their health 19%
  • Increased employee engagement in reducing healthcare costs 18%
  • Adopted new wellness/preventive health programs 17%
  • Reduced covered benefits 15%
  • Added HDHPs/CDHPs 14%
  • Stopped offering healthcare benefits 9%
  • Shifted to a defined-contribution plan

The Cadillac Tax

The impending 2018 Cadillac Tax is a prevalent challenge for employers. The ACA 40% excise tax will be imposed on the portion of group health plan premiums that exceed specified thresholds. The concern may be more regional since it could be triggered in parts of the country where healthcare costs are high and less likely to be triggered in parts of the U.S. with below average healthcare costs. Thirty-five percent of employers are very concerned about the 2018 Cadillac Tax; 25% are somewhat concerned; and 30% are not concerned. Sixty-one percent are making no changes to their benefits in light of the impending Cadillac tax while 18% have changed plans to avoid the Cadillac Tax. Recent news reports along with lobbying efforts may be influencing the 61% of companies who have a wait and see approach about the Cadillac Tax.

Defined Contribution Plans

Employers continue to learn more about defined contribution plans and private exchanges with about 35% saying they are familiar with them. This is an increase of about 5% over last year. Twenty-eight percent say that exchanges help employees understand the value of their benefits. Twenty-five percent say that a defined-contribution plan would help employees understand the value of their benefits and make more cost-conscious benefit decisions.

Five percent of employers offer defined-contribution plans (not on a private exchange) while same offer defined-contribution plans on a private exchange. Also, 7% are considering offering a defined contribution plans on a private exchange while 53% have not explored defined contribution plans.

Fifty-five percent of employers who are considering a defined-contribution plan, say they would explore the option for 2017 or 2018. This suggests that near-term adoption will be gradual. But the adoption curve may steepen as the benefits of defined-contribution plans become better known.

Private Exchanges

Employers want private exchanges to provide many solutions including health spending accounts (62%), carrier integration (58%), COBRA compliance (56%), automation of premium payments (51%), and payroll integration (50%). Employers choose private exchanges to control costs and increase employee choices, which is why employers say, most often, that they are looking for health spending accounts. Incorporating consumer directed healthcare coverage, such as HDHPs, HSAs and HRAs, helps private exchanges create a competitive marketplace that promotes cost-savings for employees and employers.

To succeed a private exchange needs to provide broad choices and help participants in the selection process. Sixty-two percent of employers say that it is somewhat important to very important to have health-spending accounts in an insurance exchange. Also considered somewhat important to very important are carrier integration (59%), COBRA compliance (56.4%), and premium payment automation (53%). Employers say they would choose the following offerings in an exchange:

  • Plan and cost comparison tools 80%
  • Online capabilities 69%
  • Combined benefit enrollment 47%
  • A help line 47%
  • Transparency solutions for treatment cost comparisons 45%
  • Mobile applications 45%
  • Progressive cost tracking tools 35%
  • Consolidated employer billing 35%
  • Integrated consumer healthcare accounts 30%
  • Financial account options 28%

Employers rank several exchange features as important, such as being a private exchange instead of a public exchange (83%), having a large selection of plan choices at targeted benefit levels (58%), and being provided by their broker or benefit consultant (55%). These findings indicate that broad choice is more important than who runs the exchange (broker versus carrier).

Wellness

Wellness programs continue to gain interest as 35% of employers have initiatives in place compared to 30% last year. Another 22% are considering implementing a program. Sixty-five percent are considering adopting a wellness program in 2017, and 16% are considering adopting one by the end of 2016.

Fifty-five percent of those offering wellness programs, offer an employee-assistance program (EAP); 53% offer flu shots or vaccinations; and 37% offer a smoking cessation program. The disease management tools that most employers offer are for diabetes (30%) and depression or other mental health (30%). Fifty-four percent of employees are not offering disease management tools. But 30% are providing services for diabetes and mental health conditions. To promote positive health outcomes, 44% of employers offer at least one wellness program; 31% offer biometric screening; and 20% offer a disease management program.

Forty-four percent have at least one wellness initiative in their workplace. Employers that are interested in offering wellness plans should consider how it would affect productivity, absenteeism, turnover, retention, and recruitment, according to the survey authors. Including these factors in the ROI discussion can help demonstrate additional savings a company could achieve.

When it comes to wellness incentives, HSA and HRA contributions (18%) and premium reductions (16%) are most popular. Companies are split on whether to offer wellness incentives with 58% not providing rewards to employees and 42% offering some type of incentive in varying monetary amounts to participate. The value of the incentives remains relatively modest. Companies interested in wellness incentives can use the ACA as a guide. Eighteen percent offer $250 or more of incentives to employees for health-related tasks. Common values of incentives are $101 to 250 and $1 to $50. For more information, visit www.HealthcareTrendsInstitute.

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)

Employees Need Customized Benefit Communications

A survey by The Guardian reveals that employees prefer benefit communications that are customized to their needs. Early entrants to the workforce (those within the first five years of working) want more choice and education in the workplace. Near-retirees (those within five years of retirement) value their benefits and worry about losing them in retirement.

Early entrants have a strong desire for financial education and guidance to help them focus on their immediate financial needs, such as paying bills, job security, work/life balance, and reducing debt. Nearly two-thirds of these younger workers say that buying insurance and saving for retirement through their employer is easier than doing it on their own, and 56% prefer learning about financial planning and products at work compared to 44% of those near retirement.

Near-retirees are most concerned about maintaining adequate health insurance, having a comfortable retirement, staying healthy, and having enough savings. While 93% of respondents in this age group say that it’s important to have retirement savings that last as long as needed, only 62% say they have achieved this goal.

Sixty percent of all employees say that their benefit meetings would be more relevant if they were targeted by age. Those within the first five years of working need more personal advice during enrollment. If employers increase access to education and advice, it can benefit the nearly 70% of early entrants who say that it is very important to find a trusted source of financial advice. Unfortunately, only 33% of employers place high importance on tailored communications, and only 13% have implemented such an approach

Benefits Remain a Key to Retention and Recruitment

Small-business owners looking to recruit and retain top employees need to pay close attention to their benefit offerings, according to a survey by Aflac. A majority of workers employed in small businesses are willing to consider a job with slightly lower pay, but better benefits. Half of potential job-changers say that improving their benefit package could keep them right where they are.

The battle for talent is getting tougher with the unemployment rate at 5.3%. Thirty-four percent of decision-makers expect to hire full-time employees in the next 12 months, and 28% expect to hire part-time employees. The study found the following:

  • 59% of workers at small companies are at least somewhat likely to accept a job with slightly lower pay, but better benefits.
  • 49% of small-business employees who agree, at least somewhat, that they’ll be looking for jobs in the next year say improving their benefit package is one thing their employers could do to keep them in their jobs.
  • 87% of employees agree, at least somewhat, that voluntary insurance is part of a comprehensive benefit program.

Small-business owners appear to be listening. Twenty-two percent of small-business employers offer voluntary insurance compared to 18% in 2014. Small-business employees who are enrolled in voluntary benefits are more likely to be very satisfied or extremely satisfied with their jobs and their benefit packages. They are also more likely to say that their benefit package meets their family’s needs.

Experts: Incentives are still important to wellness plans

The Affordable Care Act increased an employer’s ability to use incentives to drive wellness program participation, but implementing them has been tricky due to recent allegations that some plans may discriminate against employees, experts said. Aon Hewitt senior vice president Stephanie Pronk said the legal issues will make employers more cautious, but there have not been indications that companies are going to stop using them. “They might think differently about the dollar amount and what they’re asking people to do, but we haven’t [seen] movement away from it,” she said. BenefitsPro.com (4/7)

Last Updated 09/22/2021

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