Prescription Drug Use Rises for the Newly Insured

A survey of more than 3,000 U.S. employers finds that 54% are paying at least 5% more for employee medical insurance this year. Nearly one in four has seen increases of at least 10%, according to a study by Arthur J. Gallagher & Co. Sixty-seven percent say that medical and pharmacy benefits are the cornerstone of their employee benefit package and an important tool to recruit and retain talent in a tightening labor market. Telemedicine, now used by 24% of employers, is predicted to reach 42% in 2018. Narrow network healthcare plans show a growth trend from 18% to a predicted 27% in 2018. A rise in adoption of consumer directed health plans is expected from 36% to 51% in 2018. Self-insuring is expected to grow from 28% to 38% in 2018. Fewer than 5% of employers have used a private exchange, but that figure is expected to triple by 2018. Employers that excel at healthcare cost management take a comprehensive, data-driven and multi-year approach to compensation and benefit planning. However, just 8% of employers do multi-year planning with multiple data inputs. Seventy-six percent plan their benefits year-to-year, which puts them in a reactive position and less able to manage costs. For more information, visit ajg.com/NBS2016.

Employer Sponsored Insurance Rate Remains Stable

Since 2009, employer-sponsored insurance has been on the decline in California. A key question around the Affordable Care Act (ACA) was whether the reforms would further erode employer-sponsored insurance coverage. A recent survey by the California HealthCare Foundation finds that employer-sponsored insurance in the state has remained stable from 2013 to 2015. Worker eligibility for employer-sponsored insurance also remained stable, and even increased among some groups. However, the percentage of eligible workers who chose to enroll in employer-sponsored insurance declined from 86.4% in 2013 to 80.2% in 2015, bringing California closer to the national average take-up rate of 79%. This decline could be caused by the availability of alternative coverage options through Medi-Cal and Covered California.

Employees Value Student Loan Payment Benefits

Ninety percent of 400 middle managers say that that student loan debt is creating stress for their employees, according to a survey by IonTuition. Nearly 85% say that employees would appreciate being able to make student loan payments via automatic payroll deductions. Almost 85% say that employees would take advantage of a student loan repayment assistance benefit; nearly 80% say it would help them recruit talent; and 70% say it would improve employee retention and morale. Nearly 75% say that employees contribute less to their 401(k) because of their student loans. More than half of managers say that prospective employees view benefits as the most important aspect of a company, taking priority over company culture, commute, and reputation

Employees Appreciate Voluntary Insurance Benefits

Seventy-nine percent of employees see a growing need for voluntary insurance compared to last year. And of those, 60% say the need is driven by the rising cost of medical services, according to an Aflac survey. Employees who are offered voluntary benefits report higher satisfaction with their jobs and their benefits. Employees whose work site offers voluntary benefits are more likely to say the following:

  • They are prepared to pay for out-of-pocket expenses not covered by major medical/health insurance related to an unexpected serious illness or accident (73% versus 56%).
  • They are extremely or very satisfied with their jobs (73% versus 57%).

Millenials Underestimate the Cost of Care

Millennials (ages 18 to 36) are more likely than are non-millennials to underestimate the cost of an injury or illness, including medical, household, and out-of-pocket costs (66% versus 45%), according to a survey by Aflac. Sixty-five percent say they could afford less than $1,000 for an unexpected out-of-pocket expense. Millenials are more inclined to try unconventional ways to pay for out-of-pocket health care expenses, such as borrowing from friends or family and crowd sourcing. The online study surveyed 1,500 benefit decision-makers and 5,000 employees at small, medium, and large companies

Consumers Resist Robo Advisors

Financial services firms may be banking on automated robo advisors, but consumers are not buying into the idea. In a new GfK Global survey, only 9% of consumers said they would be likely to use an investment advisory service that offered just digital (text or online chat) contact with human advisors. The 25 to 34 age group is most open to the idea (15%) while less than 5% of those 50 and above would embrace an all-digital service approach from their investment firms.

Tom Neri, managing director of GfK’s Financial Services team in North America said, “Financial service companies need to be cautious in deploying robo-advisor technology, making sure to provide their high-value customers with the service they need. A one-size-fits-all seems certain to alienate even young investors. Financial firms are betting on an increasingly automated customer service approach to help them stay lean in an unforgiving consumer marketplace. But even digitally native Millennials are only lukewarm to this vision when it comes to the difficult area of investments.”

Consumers are least open to completely automated customer service for investments and mortgages. They are slightly more willing to accept an all-digital service plan for checking and savings accounts. Not surprisingly, just 10% of those surveyed would trust a computer algorithm over a human to give financial advice. Trust in robo-advisors is highest among the 25-to-34 group (17%) and lowest among those age 65 and over (6%).

Thirty percent would pay more for access to a person for help with financial services, and 45% would not be willing to forgo live customer service in return for paying less. Consumers’ hesitation to embrace automated investment services may stem from disappointing experiences. Only 27% agree that it is easy to get the information they need from the websites of financial service firms

Study Shows That Private Exchanges Help Retain Employees

Seventy-two percent of employees using a private exchange say they are more likely to remain with their employer because of their benefit program, according to a new Liazon survey. The survey findings suggest that retention can get a boost from increased engagement and awareness of benefits, including a better understanding of their value in total compensation package. Ashok Subramanian of Liazon said, “The retention case is incredibly strong for private exchanges. The data show us that employees appreciate their benefits more when they are engaged in the process of selection and view the full cost of their plans. As private exchanges become a more popular form of benefit delivery, employers are beginning to recognize the model as a way to communicate the value of the benefits they are offering to their workforce.”

When asked to compare their experience using an exchange to the traditional method of benefit distribution, 83% of employees said they are more engaged in their health care decisions and 77% said they value their benefits more. Further, by increasing transparency into employer contributions and the full cost of benefits, private exchanges help employees better understand and appreciate their benefits as part of their compensation. In fact, 85% of respondents using an exchange, for the first time, said that they are more aware of their company’s contribution to their benefit costs and 81% said they value their company’s contribution more.

Employers Want Guidance About Voluntary Benefits

Thirty-nine percent of employers that don’t have a financial advisor for voluntary benefits say it would be extremely valuable to have one, and 57% say it would be at least somewhat valuable, according to a study by MassMutual. The study, conducted by Greenwald & Associates, surveyed 565 U.S. employers ranging from those with fewer than 25 employees to those with 1,000 or more. Tom Foster of MassMutual said, “Employers are increasingly looking for help from financial advisors with voluntary benefits as their employees’ financial needs become more complex. Our research shows that advisors with the appropriate knowledge and expertise may have a clear and compelling opportunity to expand their financial practices to offer at least some guidance about voluntary benefits.”

Thirty-three percent of firms with fewer than 25 employees say such assistance is extremely or very valuable compared to 55% of firms with 1,000 employees or more. Seventy-five percent of the smallest employers and 80% of larger firms say that such advice as at least somewhat valuable. Fifty-three percent of employers that work with a voluntary advisor say they got excellent or very good advice and 77% say that got good advice.

Sixty-one percent of employers that have an advisor encourage employees to take advantage of retirement savings and other voluntary benefits compared to 49% of employers that don’t have an advisor. Also, 48% of firms with an advisor promote financial well-being for employees compared to 33% of firms without an advisor. Employers that participated in the survey offer the following insurance benefits in order of popularity: healthcare (92%), dental (73%), life (72%), vision (60%), short-term disability (52%), long-term disability (51%), accident (32%), employee assistance program (21%), wellness program (20%), critical illness (17%), cancer (16%), and long-term care (13%).

Consumers Are Not Preparing for Retirement

Consumers are more confident that they will have a comfortable retirement than they were during the recession, but they have not done much to plan for retirement, according to a survey by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. The survey reveals the following about workers in 2016:

  • 21% are very confident about having enough money for a comfortable retirement compared to 22% in 2015 and 13% in 2013.
  • 42% are somewhat confident compared to 36% in 2015.
  • 19% are not confident compared to 24% in 2015.
  • 11% with a plan are not confident about their financial security in retirement compared to 38% of workers without a plan.
  • 83% without a plan have less than $10,000 in their household’s savings and investments, excluding the value of their primary home and any defined benefit plans. In contrast, 35% of workers with a retirement plan have $100,000 or more in savings and investments.

Premium Lens Brands Make Plans More Competitive

Employers have long assumed that offering a generous frame selection as part of a vision benefit package is important to their style-conscious employees. However, new research suggests that employees’ definition of stylish eyewear extends to lens choice as well. Wakefield Research conducted the 2016 annual Employee Perceptions of Vision Benefits survey for Transitions Optical. The study reveals that 58% of employees said brand name frames define stylish eyewear, but lenses are not far behind; with 39% identifying lens color and tint, and 30% citing lens technology. Further, 90% of employees agree that a vision plan offering coverage of premium brands and lens materials helps them select stylish eyewear, and an equal percentage agreed that a vision plan is more competitive if it covers premium lens brands.

Despite the overwhelming majority who look for plans that deliver premium benefits, 26% say they are uninformed about the lens materials covered by their employer-sponsored vision plan. “The optical industry continues to meet consumer demand and move toward a more fashion-focused offering. However, if consumers are unaware of their full range of eyewear options available to fit their style, they won’t see the value in their vision plans – and will be left unsatisfied,” said Drew Smith, associate director, North America channels, Transitions Optical.

The majority of employees are satisfied with the coverage of high-end frames and lens brands through their employer-sponsored vision plans. But for those who are dissatisfied with their options, the research shows that a significant contributing factor is limited frame and lens choice. Nearly 60% of employees who say they are prevented from making their desired eyewear purchase, attribute it to an insufficient selection of frames and lenses. Likewise, among those whose frame allowance did not allow them to select eyewear that fits their personal style, more than 39% said it was because they felt they had a restricted frame choice.

“The findings suggest that employers could improve the appeal of vision benefits by ensuring plans offered to employees deliver excellent coverage of premium lens brands and frames, and that they take extra effort to ensure employees are aware of this coverage,” said Jonathan Ormsby, strategic account manager, Transitions Optical.

Vision benefits remain a popular election among employees, with eight in 10 choosing to enroll in employer-sponsored plans. In fact, according to a year-over-year comparison of the Transitions Employee Perceptions of Vision Benefits surveys, vision is the only benefit to experience increased enrollment; all other standard offerings (medical, dental, life, 401K programs) saw slight decreases compared to 2015. After medical, vision insurance tied with dental as the second most popular election, due to the growing number of employees enrolling. It is the first time throughout Transitions Optical’s history of surveying employees, that vision benefits ranked as the second most popular election.

Seventy-seven percent of those enrolled in a vision plan have used it to pay for all or part of a comprehensive eye exam for themselves in the past year. However, utilization varies among generations. Millennials are the demographic group most likely to take advantage of their vision benefits. Nearly 30% of employees aged 18-34 used the vision benefits more than once to pay for an eye health appointment in the past year, compared to 18% of Gen Xers and 17% of Baby Boomers.

Last Updated 10/14/2020

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