Workers Face Financial Fall Out of Benefit Plan Changes

Benefit plan restructuring in 2013 could hurt the personal and financial well being of American workers for years to come, according to a study by Aflac. In 2013 employers did the following:
• Eliminated or delayed raises (32%).
• Eliminated or cut back on benefits (22%).
• Changed some full-time workers to part-time workers (21%).
• Reduced the number of major medical plan options (14%).

Forty-nine percent of employers said that controlling costs is the top business issue facing companies today, up from 28% in 2011. According to the Aflac study. A number of employers took advantage of new insurance options introduced by the Affordable Care Act. Seven percent offered employees health insurance through the new federal and state government exchanges for small businesses (SHOP) or moved employees’ health insurance to a private exchange. Six percent gave employees a stipend to use to purchase their health insurance plan through the public exchanges instead of offering insurance.

Teresa White, executive vice president and chief operating officer, Aflac Columbus said, “When businesses make changes like delaying pay raises and increasing major medical deductibles and out-of-pocket costs, they can further destabilize the precarious financial position of many employees.”

Over the past several years, a growing number of companies have adopted cost-cutting strategies that include higher deductibles and out-of-pocket costs for employees. However, most workers are unaware of, or unprepared for how these changes plans may affect their finances.

The Kaiser Family Foundation reports that the number of workers covered by high-deductible health plans has quadrupled in the past six years, from 5% in 2007 to 20% in 2013. The 2014 Aflac report found that 56% of employers increased employees’ copayments and/or employees’ share of premiums in 2013. Fifty-nine percent intend to do the same in 2014. In addition, 19% of employers implemented a major medical plan with a high deductible (over $1,000) and health savings account (HSA) as an alternative to a traditional medical plan in 2013; 36% more than had planned to do so.

Only 17% of workers are extremely or very prepared to pay for out-of-pocket expenses related to an unexpected serious illness or accident that isn’t covered by major medical insurance. Forty-nine percent say they would be able to afford less than $1,000 in out-of-pocket expenses associated with an unexpected, serious illness or accident and 27% could afford less than $500.

Changes to workplace benefits take on more importance amid the difficult financial situation that many of today’s workers are facing. While employers look for ways to limit their benefit spending, they may be overlooking employee-paid benefit, including supplemental insurance policies, which provide an additional layer of coverage for employees beyond major medical insurance.
Employees see enrolling in voluntary benefits as a way to address the following challenges to their health insurance:
• Rising medical costs (76%).
• Rising coverage costs (66%).
• Increasing deductible and copayments (61%).
• Changes due to health care reform (51%).

The survey also reveals the following about employees:
• 76% are at least somewhat likely to purchase additional voluntary benefits if offered to them.
• 48% say they are more knowledgeable about voluntary benefits than they were a year ago.
• 63% see a growing need for voluntary benefits.
• 88% consider voluntary benefits to be an important part of a comprehensive benefit program.

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Last Updated 08/10/2022

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