5 Predictions For Employee Benefits In 2022 And Beyond

5 predictions for employee benefits in 2022 and beyond | BenefitsPRO

Source: BenefitsPRO, by Becky Seefeldt

The pandemic and the Great Resignation have created a perfect storm for employers. Employers need to be forward-thinking regarding employee benefits because this crucial feature can make or break a company. As people are less likely to stay at their current positions, they’re also much less interested in applying with any company that doesn’t offer them benefits such as health care or vacation time.

Related: 10 recruiting trends for the years ahead

The future of benefits is uncertain, but there are five predictions for where they’re headed in the next few years that could help employers adjust their current package.

1. A push to improve HSAs

There’s a chance that some common-sense changes could be made to health savings accounts (HSAs). These adjustments will allow those who are eligible for Medicare or Tricare benefits the ability to contribute towards their own HSAs. There’s also interest in revisiting how we define what a “qualified high-deductible plan” entails so as not only to accommodate more Americans but also do away with any unnecessary restrictions altogether.

The solution to this problem is not one-size-fits-all. Some would like the requirement taken away altogether, while others are open to compromise. This may include modifying how high-deductible plans should work so that anyone, even those with limited benefits, can contribute towards an HSA. With these changes, individuals will be able to prepare themselves better because they can use their HSA as needed now or put money away for the future.

2. A convergence of health plan options

For roughly the past 20 years, premiums have been increasing. The average premiums for family coverage have increased from $7,000 in 2001 to more than $22,000 by 2021. Deductibles have also risen, with the average deductible for a PPO rising from $201 in 2001 to nearly $1,700 in 2021. The average deductible is so high that it’s beginning to meet the criteria for a high-deductible health plan. PPOs (and all plans) have been increasing their deductibles, which may indicate convergence between health care and savings options.

The best option for employees can be to utilize these new and improved tools. Some people hesitate to move into a high-deductible health plan because of the name: “high-deductibles.” But, this is an excellent option for certain employees who want more control over their expenses and savings rates if something happens unexpectedly. The contribution and eligibility for an HSA can be adjusted by making a few changes to the PPO design. This way, employees will save more money since they’ll have access to managing their medical expenses, which benefits employers, too!

3. Increased or improved price transparency

Increased or improved price transparency has been on the table for about two decades; however, there is more reason than ever to expect forward progress in this area. First is the No Surprises Act, which protects consumers from being surprised by unexpectedly high bills. This includes air ambulance claims, emergency services, and even non-emergency medical treatments that are billed as out-of-network when performed at an in-network facility. This act establishes limits on what can reasonably be charged and provides dispute resolution between plans and out-of-network providers.

Next, the Transparency in Coverage Act requires plan providers, including employers with group coverage or individuals purchasing their own plan to be transparent about prices and out-of-pocket costs. The start date for this act has been pushed back to July 1, 2022.

4. A move to strengthen health and wellness

When it comes to health and wellness, there are several options available. Help employees identify and address health risks before they result in costly medical procedures. As an employer, you can provide them with more comprehensive management and assistance using digital programs, online counseling services, etc.

Another option is utilizing a “specialty account” that caters to unique needs. This type of pre-tax savings plan has been gaining traction with employers who want to help their employees save money on afterschool programs, fitness classes, or even scooters for commuting purposes.

5. An increase in targeted benefits communications

The final prediction is regarding an increase in targeted benefits communications. With targeted communications on the rise, this trend is just getting started. We live in a world where personalization is everything, and benefits should be no exception. Benefits have traditionally been a data dump that occurs every few weeks in which employees are overwhelmed by the sheer volume of information. As employees continue to demand more from their employers both digitally and physically, companies must find ways to elevate their offerings. Consumers want personalized everything — from meals at home or takeout to how much information is given about them when they buy something. Why should employee benefit plans be any different?

While the future of benefits is uncertain, employers should be proactive in preparing for changes. Employers need to be forward-thinking regarding employee benefits and stay up-to-date on the latest industry trends. These five predictions offer a glimpse into what could be ahead, so it’s essential to start thinking about how they may impact your organization and employees.

Becky Seefeldt is vice president of strategy at Benefit Resource LLC (BRI), a leading provider of dedicated pre-tax account administration and COBRA services nationwide.

DOJ Fights Mergers

by Dr. Merrill Matthews

Many health policy experts warned that the Affordable Care Act would lead to massive consolidation in the health care industry, including hospitals, physicians’ practices, and especially health insurers. Now the Justice Department is pushing back by opposing the mergers of four large health insurers—Aetna with Humana and Anthem with Cigna. The real question is whether the insurers will continue to sell in the exchanges if they aren’t allowed to merge?

The Obama administration says that the mergers would reduce competition. Attorney General Loretta Lynch explained, “If allowed to proceed, these mergers would fundamentally reshape the health insurance industry.” That’s rich, since nothing has reshaped the health insurance industry more than Obamacare—and by design.

But government antitrust litigation is almost always about politics rather than economics. And that’s why free market advocates tend to be skeptical of most government antitrust efforts; companies, not the government, are in the best position to judge whether a merger would be beneficial.

And politics is certainly at work in this instance. President Obama promised the country that his health care legislation would increase competition and lower health insurance premiums. Now that just the opposite is happening, his administration is trying to limit the fallout and appear to be fighting for the consumer. But blocking the mergers will likely hurt consumers and competition.

Health insures are fleeing the Obamacare exchanges because of financial losses. A recent McKinsey & Co. survey found that health insurers selling in the individual market—where individuals buy their own coverage, usually through Obamacare exchanges—lost $2.7 billion in 2014. Those loses only compounded in 2015. The Hill reports that Humana “is pulling out of Obamacare plans in all but a handful of states after a year of nearly $1 billion in losses.”

Aetna said it lost about $140 million on the individual market in 2015. The Texas Blues Cross parent company, which controls Blues plans in five states, lost a reported $2 billion—$720 million just in Texas.

Oscar, a start-up health insurer that was supposed to bring new thinking to the individual health insurance market lost $105 million on Obamacare exchanges in 2015—and that was in just two states, New York and New Jersey.

UnitedHealthcare, the largest health insurer, reported last January that it lost $720 million in 2015 selling individual health insurance on the Obamacare exchanges. And about $1 billion when 2014 and 2015 were combined. And 16 of the 23 nonprofit Obamacare co-ops—which were the left’s consolation price for not getting their “public option”—have gone under, with more collapses on the way.

The left has long wanted to “take the profits out of health care,” and Obamacare seems to be doing exactly that. Obama officials dismiss the health insurer losses, claiming that many of the insurers are still profitable. But that’s because health insurers often have several lines of business, some of which may be profitable even as they lose hundreds of millions of dollars selling in Obamacare exchanges. No responsible board of directors will let such losses continue indefinitely. Larry Levitt of the Kaiser Family Foundation has been quoted as saying, “Something has to give. Either insurers will drop out or insurers will raise premiums.” And that’s exactly what we’re seeing. Nationwide, there was a 12% decline in plans in 2016 as compared to 2015, and that includes a 40% decline in PPO plans. There will be even more exits in 2017. Prior to Obamacare there were 18 insurers offering individual coverage in Kansas. Today there are three. The Obama administration initially praised health insurance competition in Maricopa County, Arizona. This year there were eight plans available on the Obamacare exchange; next year there will only be four—unless Aetna drops out, too. And insurers that choose to remain are increasing premiums. Texas Blue Cross has requested an increase of up to 60% for its 2017 premiums, and Arizona Blue Cross requested a 65% increase.

We know Humana, without the merger, is pulling out. Aetna claimed for months it would remain in the Obamacare exchanges, but is now saying it may scale back. And Anthem announced recently that it will only expand into other exchanges if it’s Cigna merger goes through. In other words, the Obama administration’s efforts to keep four insurers from becoming two may mean that only one or none will continue selling on the Obamacare exchanges.

Expect to see even fewer insurers participating and higher premiums as financial losses increase, especially if the Obama administration continues its efforts to stop money-losing insurers from merging. Policyholders will likely be receiving the notice that their premiums are rising or policy is being canceled in September or October—just before the election.

Merrill Mathews is a resident scholar with he Institute for Policy Innovation at ipi.org.

Obesity Is Driving Disability Claims

Disability claims have increased significantly over the past 10 years for joint disorders and musculoskeletal issues in the U.S., according to data from Unum. Greg Breter, senior vice president of benefits at Unum noted that aging Baby Boomers are staying in the workforce longer, and more than a third of U.S. adults are classified as overweight or obese. “Almost everyone over 55 begins to feel the twinges in joints and backs. But research is showing that obesity is contributing to a dramatic increase in knee replacement surgery and exacerbates other conditions like arthritis, back injuries and joint pain. We also see obesity contributing to other issues, like heart disease, stroke, type 2 diabetes, sleep apnea and respiratory problems, and certain types of cancer.” Aging and obesity tip scales in Unum’s 10-year review of disability claims. For musculoskeletal issues, there has been a 33% increase in long term disability claims and a 14% increase in short term disability claims. There has been a 22% increase in long term disability claims and 26% increase in short term disability claims for joint disorders. While Unum has seen an increase in joint and musculoskeletal issues, cancer has stayed the number one reason for long term disability claims over the past decade, and pregnancy continues to top the list of reasons for short-term disability.

Here are the top long-term disability causes for 2015:

  • Cancer 16.5%
  • Back disorders 13.9%
  • Injury 10.4%
  • Cardiovascular 9.6%
  • Joint disorders 9.2%

Here are the top short-term disability causes:

  • Pregnancy 27.4%
  • Injury (excluding the back) 11.3%
  • Joint disorders 2%
  • Back disorders 7%
  • Digestive system 6.6%

Data Insights from the 2016 ACA Marketplace

 

ACA


Robert Wood Johnson offers the following observations about the Affordable Care Act Marketplace:

  • Carriers made adjustments in 2016 to reduce their exposure to high costs: In 2016, carriers attempted to minimize their exposure to high costs by reducing the number of plan offerings with out-of-network benefits, among other strategies. This change occurred at all metal levels and in all regions. The number of Silver plans that are HMOs or exclusive provider organizations (EPOs) increased from 61% in 2015 to 69% in 2016. The number of Gold plans declined compared to other metal levels. While the number of Silver plans increased 2.9%, the Gold plans declined by 8.7%. The number of Gold plans declined in most regions.
  • Regional price variation in narrowed: There was a geographic convergence in premium prices in 2016, as premiums rose far more in regions that had lower prices the prior year. Nationally, the distribution of average premium prices tightened in all rating areas. This pattern was less straightforward for deductibles, as many combinations of cost-sharing options are on the market.
  • Price variation increased within markets: Despite the reduced variation across markets, differences in premium prices increased within markets. The average premium price range increased from 2015 to 2016 in a rating area. This is true for all metal levels and all regions. The distribution has become more skewed, as maximum prices increased more than minimum prices. In 2016, a Blue or a national carrier offered the highest priced plan in a rating area about 75% of the time.
  • There are still large regional differences in plan design: Plans in the Northeast and West have a much broader range in premium prices and less variation in deductibles. Plans in the Midwest and South have a smaller range in premium prices and a far greater range in deductibles. There were some changes in these patterns from 2015 to 2016, but there are still important regional differences in plan design.
  • More regulated markets have higher premiums and lower deductibles:  Federally facilitated marketplaces with the most plan regulation—CA, CT, DC, MA, NY, RI, VT—had the highest premiums and lowest deductibles.

More product changes are likely in 2017. There is room for further reduction in broad network plans. Most entrants in 2016 primarily offer narrow network products. This will probably continue to vary regionally. We may also see further reduction in Gold plans, although carriers must sell Gold and Silver. There are indications that some carriers may reduce their Bronze offerings. The number of Bronze plans increased very little in 2016. There may be reductions in some markets in 2017. The actuarial value of Bronze and Silver plans seems to have grown closer in 2016, and average prices are quite close in many regions. While carriers have resisted government calls for standardization and simplification of plan offerings, the industry seems to be standardizing itself through potential reductions in product offerings.

Premium prices will converge further. While premium increases are expected, some regions are relatively under priced. A further reduction in regional differences will probably take place. Prices may converge at the levels seen in more regulated state-based marketplaces, which may be more appropriately priced.

The weaker markets are smaller, largely rural, have less carrier participation in 2016, fewer plans, and lower premiums. These markets may experience higher premium increases and continued low carrier participation, which will inhibit enrollment gains.

UnitedHealth Group announced that it will exit 26 markets and participate in three. The company has not announced a decision about five others. In states where UnitedHealth Group is exiting, the insurer was priced relatively lower than others, and there tended to be a higher-priced Blue plan in the marketplace. Exit states weak markets with fewer plans, less growth in the number of plans, a smaller range in premium prices, and below average premiums—despite average or above average premium increases from 2015 to 2016.

UnitedHealth Group may have concluded that, due to the small size and low level of activity in certain markets, there would not be enough additional enrollment to offset negative claims experiences, and that it would be hard to raise premiums enough to stop losing money with enrollees. If other carriers follow suit, weak markets may become weaker as they lose carriers and/or experience above average price increases. Humana seems to have positions in weak markets and is priced relatively low in many of them. Humana’s decisions about exiting markets suggests that it may be seeking to reduce its presence in weak markets.

Hundreds of Thousands of Californians Face Increased Tax Penalty

Covered California is reminding consumers that time is running out to avoid the tax penalty for those who do not have health insurance in 2016. A recent report from the Henry J. Kaiser Family Foundation (http://kff.org/health-reform/issue-brief/the-cost-of-the-individual-mandate-penalty-for-the-remaining-uninsured) estimates that the average household penalty in 2016 will be $969, which is a 47% increase from 2015. The report also estimates that those subject to the penalty include 75% of people who are eligible for premium subsidies. The fine is calculated two different ways; uninsured consumers will pay whichever amount is higher. The first calculation is 2.5% of household income, with a maximum of the total yearly premium for the national average Bronze health insurance plan premium. The second calculation is $695 per adult plus $347.50 per child under the age of 18, with a maximum of $2,085.

The following table shows the potential range of penalties for not having insurance in 2016.

Estimated Annual Penalties for Not Having Health Insurance in 2016
Household Size Minimum Maximum*
1 (single filer) $695 ($58 per month) $2,484 ($207 per month)
2 (single filer with one dependent under 18) $1,043 ($87 per month) $4,968 ($414 per month)
3 (married filing jointly with
one dependent under 18)
$1,738 ($145 per month) $7,452 ($621 per month)
4 (married filing jointly with two dependents under 18) $2,085 ($174 per month) $9,936 ($764 per month)

Nearly nine out of 10 Covered California enrollees get some financial assistance. Covered California says that 670,000 enrollees paid $100 a month or less for their coverage in 2015 and 350,000 enrollees paid $50 or less per month. Open enrollment runs through Jan. 31. Anyone signing up between Jan. 16 and Jan. 31 will have their health care coverage start on March 1.

Last Updated 05/25/2022

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