7 tips to prepare your workforce for flu season
Since seasonal flu activity can begin as early as October, the time to prepare is now. While the vaccine is one of the most efficient ways you can protect your employees, there are other actions you can take to brace your workplace for the upcoming flu season. Alan Kohll, founder and CEO of wellness vendor, TotalWellness, offers these tips:
1. Educate employees
Educate employees about flu symptoms and how the influenza virus is spread.
2. Step up hygiene
Step up your office’s hygiene practices. According to a 2012 study, the dirtiest places in the office include break room sink faucet handles, microwave door handles, keyboards and refrigerator door handles.
3. Review policies
Review your policies for PTO/sick leave and telecommuting.
4. Create a communications plan
Create a communications plan for flu season, from the signs and symptoms to flu shot myths, sick time policies, wellness reminders and flu shot clinic dates and times.
5. Develop a contingency plan
Have a contingency plan in place to help maintain normal business operations in the event that key employees are out sick or other disruptions occur.
6. Communicate health plan details
Ensure that employees are aware of health insurance plan details and that they know who to call with questions.
7. Host an on-site clinic
Host an on-site flu shot clinic or participate in a voucher program so that staff can easily get vaccinated at a local pharmacy.
3 Takeaways From the Medicare Trustees Report
Originally posted at 9:41 am EST, August 1, 2014 by Drew Altman on https://blogs.wsj.com.
The annual report from the Social Security and Medicare trustees predicted that Medicare will be solvent until 2030, four years later than the trustees predicted last year. That’s thanks to the recent slowdown in Medicare spending and a stronger economy that yields higher revenue through payroll tax contributions to the Medicare trust fund.
The administration and congressional Democrats are taking credit for elements of the Affordable Care Act that have helped to slow the growth in Medicare spending, and they warn against changes to Medicare that they fear would shift costs to seniors and undermine the program.
Republicans, however, see little good in the trustees’ report. “Don’t be fooled by the news that Medicare has a few more years of solvency,” Rep. Kevin Brady, chairman of the House Ways and Means subcommittee on health, said in a statement. More fundamental changes to Medicare are needed, many Republicans argue, such as transforming the program to a premium-support or voucher model.
Here are three points that might have been lost in the back and forth over the report by those on the left and the right:
* Contrary to conventional wisdom, Medicare appears to be outperforming the private sector. Medicare spending per capita rose at a 6.1% annual clip between 2000 and 2012 vs. a 6.5% growth rate for private health insurance. And Medicare spending is projected to rise at a 4% per capita rate between 2013 and 2022 vs. 4.9% for private insurance. (The bad news is that GDP per capita is projected to rise more slowly, at 3.7% per year.) Medicare’s problem is less poor performance and more the challenge of meeting the needs of an aging society and seniors who have modest incomes to pay for their health care.
* The ACA is projected to cut $716 billion in expected increases to providers and insurers between 2013 and 2022. Despite claims that cutting payments to providers and private plans could make the sky fall, there is no evidence so far that the industry or beneficiaries have been adversely affected by the reductions. In fact, enrollment has been growing in the private Medicare Advantage plans, which were hit by the most severe and controversial reductions, and the gains are projected to continue. So far, complex schemes to reform the way Medicare pays doctors and hospitals, which many believe hold promise, have produced mixed results in the effort to cut costs. But as $716 billion in Medicare savings demonstrates, the tried-and-true way to save money continues to be shaving a little off payment increases each year, as long as the health-care industry is still in the black and can absorb it.
* Perhaps the best news from the 2014 trustees report is that the country has a bit more time to hope for a more functional Congress that can figure out how best to finance Medicare for an aging population. It is almost impossible to envision the current Congress and administration working together on these long-term challenges.
With liberals and conservatives at odds over Medicare’s future direction and seniors such a strong voting group, it will be difficult to shift Medicare quickly in any direction. But there is good news for now in the trustees report.
IRS releases draft instructions for ACA reporting forms
Forms 1094-B and 1095-B are used by organizations that are not reporting to the IRS as large employers – insurers and sponsors of multiemployer plans, for example. Forms 1094-C and 1095-C, meanwhile, are used by organizations that are subject to the employer mandate.
“The instructions are voluminous and reflect the complexity behind the information, particularly that employers are going to have to provide,” says Amy Bergner, managing director, human resource solutions at PricewaterhouseCoopers in Washington, DC.
The IRS released the draft forms a few weeks ago but without draft instructions, “it was difficult to tell exactly what employers and insurers were going to have to do,” she notes. “Now we have these draft instructions that really walk through what’s behind all of the reporting.
Bergner says employers should review the draft instructions as soon as possible with all third-party providers who help them with tax reporting. “Even though these reports are not filed with the IRS or sent to employees until early in 2016, employers have to be capturing the information on a monthly basis starting in January 2015,” she says.
The purpose of the forms is three-fold:
1. When individuals file their individual tax returns, they’re going to have to report whether or not they have health insurance as required by the ACA’s individual mandate. The IRS can compare what the individual is reporting with what the employer is reporting.
2. The IRS can double check whether people who have received federal government subsidies to buy insurance on the exchanges were actually entitled to it. People who are offered employer-sponsored coverage are not entitled to the subsidy.
3. The IRS can enforce the employer mandate, which requires employers with 50 or more full-time employees to offer health insurance.
“The instructions include many of the complicated and detailed rules about the employer mandate, details usually reserved for regulations or other technical guidance,” says Bergner. “We expect that many employers and insurers will need assistance decoding the instructions and the underlying rules to be able to ultimately provide timely and accurate reports.”
Millennials under insured compared to other age groups
“A lot has been made of the so-called ‘young invincibles’ who are choosing to forgo health insurance,” said Laura Adams, senior analyst, insuranceQuotes.com. “This could be a costly mistake, especially because this group has easy access to health insurance. Young people typically pay much lower prices to obtain coverage via the health insurance exchanges and can receive subsidies depending on their income. Plus, they can stay on their parents’ health insurance policies until age 26.”
Millennials also are less likely than other age groups to own health, auto, life, homeowner’s, renter’s and disability insurance, according to the report. Some of the disparity can be attributed to living with their parents or having fewer assets to protect, insuranceQuotes.com said, but millennials appear to be under insured across all insurance lines.
“Fewer Gen Yers are buying houses and more are living at home with their parents,” said Kile Lewis, co-CEO and co-founder of oXYGen Financial, a financial planning firm serving generations X and Y. “But only 12 percent of 18- to 29-year-olds have renters insurance despite the fact that almost four out of five adults under 25 live on their own, and two-thirds of adults ages 25 to 29, rent their homes, according to a report from the Joint Center for Housing Studies of Harvard University.”
Highlights from the report:
- 95 percent of millennials said their overall financial security is very or somewhat important, almost the same number as consumers aged 30 to 64.
- 12 percent of millennials have renter’s insurance.
- 64 percent of millennials lack life insurance. The most common objection is that it costs too much.
- 36 percent of millennials do not have auto insurance, which could be attributed to declining numbers of young adult drivers.
- 10 percent of millennials have homeowners insurance, compared to half of consumers ages 30 to 49, and 75 percent of those 65 and older.
- 13 percent of millennials have disability insurance, compared with 37 percent of those 30 to 49.
“Despite all of this evidence that millennials do not have a lot of insurance, most millennials are confident they are prepared for the financial consequences of car accidents, having their belongings stolen, incurring substantial medical bills or becoming disabled,” InsuranceQuotes said. “Sixty percent of 18-29 year-olds are either very or somewhat confident that they are prepared for those risks; older adults are equally confident in their own preparations.”
The survey was conducted by Princeton Survey Research Associates International, and findings are based on responses from 1,003 adults in the continental United States. Statistical results were weighted to correct known demographic discrepancies; the margin of sampling error for the complete set of weighted data is plus or minus 3.5 percentage points,
Employers partner with academic institutions to create specialized programs
Originally posted August 27, 2014 by Nick Otto on https://ebn.benefitnews.com
It’s a new spin on an older system, as benefit managers are trying to evaluate the long-term benefits of helping to pay for their workers’ education — and more cost-effective and results-oriented methods of doing so. The big question: do these programs indeed serve to attract more candidates, and does the training necessarily produce workers who are better skilled and interested in staying with their current jobs?
In the past, tuition reimbursement programs were a more unstructured offering — occasionally the classes needed to be work-related in order to qualify for employer reimbursement, depending on an employer’s needs — resulting in a pleasant but not entirely critical employee benefit, with workers paid back for their studies as long as they maintained an acceptable
grade level.
Under a new model emerging at a variety of employers, direct partnerships with the online-specific satellites of accredited post-secondary institutions are helping to create more specialized and self-directed educational offerings, catered to the skill sets employers have found lacking in their workers. The participating college offers a discounted tuition rate and in exchange, the employer works to promote that particular program. Employees have less range of choice in educational offerings as a result, but may find the classes more individually suited to their needs and ultimately more important to their professional development.
“Corporate America is always trying to attract and retain the best talent, that’s certainly a very key HR strategy for most employers,” says Carol Sladek, partner and work-life consulting lead at Aon Hewitt. “So what we’re seeing is an increased interest on the part of employers to try to find the types of benefits and programs and policies that will help employees not only join their team, but stay on their teams and also help better employees along the way.”
Anthem Blue Cross and Blue Shield of New Hampshire partnered last year with College for America, a nonprofit college launched specifically for working adults and their employers, to create a competency-based program with no credit hours or courses. Students learn through projects targeted toward specific, employer-focused skills — communication, teamwork, ethics and others — resulting in either Associate- or Bachelor-level degrees. One of the biggest perks is the price tag: At $2,500 annually, the all-inclusive program is self-directed and online, providing an approach that allows students to progress through the program at their own pace.
Chris Dugan, director of public relations for Anthem’s New Hampshire operations, says it was one of the first companies to partner with the university last year, and since then, the insurer has had 56 employees participate in the program.
“Not only are employees going through this program stronger at their day job, but it could open up other opportunities in our company — so we promote this vigorously to our employees, and they seem to have strong interest [so far],” Dugan says. The convenience factor, plus Anthem’s arrangement to pay employees’ tuition, has also added to the new program’s success.
To date, College for America has enrolled nearly 1,000 students since its pilot launch in January 2013, adding more than 100 new students per month in recent months. Currently, it has about 60 employer partners — including corporate, government and nonprofit groups — offering the College for America program to their employees.
“We’re currently in program development discussions with several national employers and associations who see a specific labor market need where a competency-based, workforce-applicable degree would help with their talent development pipeline,” says Colin Van Ostern, a member of the college’s leadership team. “We’re seeing significant demand.”
Another example of corporate-academic partnerships can be seen with Starbucks, which recently created a program allowing any employee working 20 hours a week or more to be eligible for a full reimbursement if they enroll in Arizona State University’s online program as juniors or seniors. Freshmen and sophomores receive a partial scholarship and needs-based financial aid toward the foundational work of completing their degree.
According to data from EdAssist, an administrator of tuition assistance programs, spending on — and utilization of — tuition assistance varies by industry. Among health care companies in its database, for example, the average annual spending per employee on tuition assistance is $2,332, yet the industry boasts the highest utilization rate at 8%.
Anthem and Starbucks’ examples come in contrast to other employers’ internalized education programs — fast-food retailer McDonald’s and its well-known Hamburger University in Oak Brook, Ill., a corporate managerial training program that has offered skills-based training to thousands of company employees since being founded in 1961.
Whatever the venue, Karen Hutcheson a partner in the rewards and talent management practice at Mercer, says that employees are keen in keeping up with current skills.
“I’m finding employers also want to make sure their employees have those opportunities; it’s a win-win,” she says. “On the employer side, if you can educate your workforce in an affordable and manageable fashion, you can feed into stronger engagement.”
Higher education needs to be more nimble and responsive to student needs, she adds. And people in the workforce want strong skills, but the cost of traditional higher education is so high. “This is a nice way to marry the two together,” Hutcheson says.
Limiting options
On the flip side, overly focused programs do limit some employees’ options, and might lead to lower benefit participation.
“With the lack of choice, high potential employees may discount the value of obtaining a degree or graduate degree,” Hutcheson says. And although it’s still too early to tell, another potential downside would be the perceived value of an online degree versus the historical degree. “Not all Bachelors [degrees] are created the same,” she adds.
Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management, says the College for America model is part of a growing trend of employers working with community colleges, vocational schools and traditional universities to create structured programs.
Part of that growth, he says, seeks to offset a continued imbalance in the labor pool.
“During the height of the recession, there were employers desperate for skilled tradesmen and couldn’t find them to save their lives,” he says.
In the future, Elliott says he expects to see more corporate partnerships as a way of helping to drive down the cost of continuing education for employees — particularly in the Starbucks’ example.
“The reality is, these kids will be graduating with maybe $10,000 in debt,” compared to the much higher numbers in average student loan debt as the result of traditional, self-funded college programs. “You do the math.”
Aon Hewitt’s Sladek says that business costs and overall return on investment continue to be the biggest questions facing benefit managers as they consider the wider range of educational options.
“A lot of employers are sitting back waiting to see what will happen,” she says. “The Starbucks thing was really interesting and there was a lot of interest. I think a lot of other employers are standing on the edge watching.”
Hutcheson calls it a “wave of the future.”
“What we’re seeing in the workforce are people being more focused on building and maintaining skills,” she says. “We see employers wanting to see their employees be more prepared and in charge.”
Reducing benefit costs while still valuing employees
Originally posted August 26, 2014 by Steve Grossi on https://ebn.benefitnews.com.
As part of valuing our employees, benefits are viewed as a direct extension of pay and considered to be a vital part of an employee’s total compensation package. Benefits represent a sizeable investment for BOK Financial as well as for each employee. It’s our corporate culture to place a great deal of attention on benefits, and helping employees understand all of the value of their benefits package is a key focus for our HR team.
People who work for us are independent thinkers. It’s important to make our own decisions, and that’s especially true when it comes to health benefits. This is the reason our company is committed to a program that offers employees the flexibility to choose their coverage in most major benefit areas. Each employee can put together a personal package to suit their needs, and I believe that this flexibility shows the company’s commitment to each and every member of our staff as well as their families.
But this level of commitment to our employees – although vital – is expensive. After payroll, benefits costs were our No. 1 company expense, and as a result we found ourselves coming to terms with the impending Cadillac Tax, a penalty against companies over a particular threshold in terms of premiums resulting from the Affordable Care Act.
We added a consumer-directed health plan to our benefits offering, along with a health savings account, hoping to bring overall benefits costs down and reduce our exposure to the Cadillac Tax. Our belief was that the CDHP would suit the needs of many employees, and premiums would be lower for both the company and the employee. But explaining the benefit of a CDHP to employees is challenging – people are confused by the options, and most simply choose to do nothing and remain in their current plan. Others assume that the most expensive plan is the best, and default to that choice.
After one year with the CDHP, adoption was well short of our company goal, at only 5%. We went looking for help, and ended up with a solution from Tango, a company that helps organizations save money by optimizing health benefits, while keeping employees happy.
The first step was to educate our employees, and Tango explained the differences between each plan in simple, relevant terms. A plan optimizer tool allowed employees to walk through a series of questions and decide which plan was the best based on their individual needs. Since the tool is online, employees can log in from home and walk through the steps with their spouse, and discuss their options. Our CEO and his wife went online at home to use the plan optimizer, and they ended up choosing the CDHP. In all, over a thousand of our employees logged on to the online tool, with most spending at least 20 minutes reviewing and comparing their options.
For even more employee awareness, Tango put a communication plan in place that included email-based updates and information. Weekly and monthly communications continue to go out to the employees explaining how to open and use their HSA, and other helpful tips on topics like reimbursements and tax filing. The emails were very specific and targeted, so employees were more likely to open and read them. Tango also provided videos and webinars specifically created for our employees with a direct comparison between the CDHP and the traditional PPO plan – helping to demystify the choice between the plans. Normally this kind of information would come from the HR team, but Tango’s level of service meant that our HR team could focus on other critical employee needs.
Reviewing our results at the end of the first enrollment period with Tango, we saw adoption of the CDHP and HSA go from 5% of the employee base up to 30%. Our employees were pleased with the plan changes and with the amount of information they were getting about the growth of their HSAs. And it was a huge win for the company: BOK Financial saved over $880,000 in premiums and avoided an additional $190,000 in taxes.
BOK Financial continues to work with Tango to boost further adoption of the CDHP, and to retain existing plan members and ensure that employees are getting the maximum benefit out of their HSAs. As a chief human resource officer, the ability to increase adoption of the CDHP while maintaining our relationships with employees was very important to me. I’m thrilled that we’re able to retain our commitment to value our employees, even as we make changes that benefit the company’s bottom line.
Why employees need 401(k) investment advice
Originally posted August 21, 2014 by Michael Giardina on https://ebn.benefitnews.com
This retirement disconnect is not surprising, according to Schwab Retirement Plan Services, which released a survey this week of more than 1,000 401(k) plan participants. “We often see that participants are hesitant to take action when they’re not completely comfortable with the matter at hand, and this is especially true when it comes to financial decisions,” says Steve Anderson, head of retirement plan services at Charles Schwab.
Aside from health coverage, the survey found nearly 90% of workers agreed that the 401(k) is a “must-have” benefit, more than extra vacation days or the ability to telecommute. However, employees said they spent more time researching options for a new car (about 4.3 hours) or vacations (about 3.8 hours) than researching their 401(k) investment choices (2.1 hours).
“The fact that an overwhelming majority of workers demand 401(k)s is good news, because it shows that people understand that they are responsible for their own retirement,” Anderson tells EBN. “Participating in a 401(k) program helps workers develop the discipline to save, and the earlier they begin to save, the more prepared they will be for retirement.”
Meanwhile, about half of plan participants said that their defined contribution plan’s investment options can be more confusing than their health benefits options. But gaining the needed assistance to understand the real value of their retirement plan was not top-of-mind for employees, as respondents said they were more likely to hire someone to perform an oil change to their vehicle, landscape their yard or help with their taxes than to seek out assistance for their 401(k) investments.
Anderson adds that while educational resources from plan sponsors may be just what employees need to make sound investment decisions, he says that “if participants have to seek out these resources on their own, chances are they won’t utilize them to their full benefit.”
Even with the prevalence of auto-enrollment and auto-escalation, employers may still have to do more. Only one-quarter of employees with access to professional 401(k) advice report having used it, says Anderson.
“Now employers can take the next step in plan design by proactively delivering advice to their employees,” Anderson explains. “We know getting advice can make a big difference for workers, as we’ve witnessed the impact of 401(k) advice on participant outcomes.”
For example, 70% of respondents noted that they would feel extremely or very confident in their investment decisions if they used a financial professional. Meanwhile, only 39% highlight the same confidence level if they opted to make those investment choices themselves.
“Participants who receive advice save more, are better diversified and stay the course in times of market volatility,” Anderson explains.
Employers create game plan for expected health care cost increases
Originially posted on August 22, 2014 by Michael Giardina on https://ebn.benefitnews.com
Employers across the country predict that their health care costs will increase by 5.2% in 2015 if they decide to maintain their current health plan structures. With modest changes, this increase drops down to 4%, according to a recent Towers Watson’s survey of nearly 400 employee benefit professionals from midsize and large companies.
Meanwhile, Towers Watson finds that the rising tide of health care costs has become a main focus of executives, with two-thirds of chief financial officers and chief executive officers holding a key place in health benefit strategy discussions. It’s coming down to wire for many employers to get costs down as the ACA’s excise tax takes effect in 2018.
Randall Abbott, senior consultant with Towers Watson, says that many employers are approaching the cost conversation “as a balance of shareholder responsibility and social responsibility.” But it’s not a surprise that three-quarters of employers are worried about the excise tax, commonly referred to as the Cadillac tax.
“There is this impression that employers are just raising costs up,” Abbott explains, but highlights “they are doing it out of necessity.”
“They are trying to do it as thoughtfully and as responsibly as they can, and that’s a constant battle,” Abbott continues.
This battle, according to Towers Watson’s survey, is becoming a reality for many. More and more employers are planning to incorporate consumer-driven health plans, and other high-deductible health plans, into their coverage umbrella. By 2017, more than half of respondents expect to make this plan the only option, eliminating other plans.
“Inaction is not an option here,” Abbott explains, while noting that account-based health options such as health savings accounts can help all interested parties realize the costs at point-of-care.
Tom Meier, vice president of product development for Health Care Service Corporation, the nation’s largest customer-owned health insurer, agrees that CDHPs have been growing at record rates. Trade group America’s Health Insurance Plans reports that 15.5 million Americans were covered in HSA-eligible plans – a number that has tripled in the last six years.
“We’re seeing employers go all in on CDHPs, and I don’t see that slowing anytime soon,” Meier explains to EBN. “Employers are going to have to revisit their plan design and likely move out of those high cost benefit designs in order to comply and get under [the ACA’s excise tax] that threshold.”
Currently, HCSC has more than 2 million members enrolled in CDHPs under the insurer’s offering, which includes five Blue Cross and Blue Shield states. Meier adds that moving from $250 preferred provider organization health plan to a full-replacement $5,000 deductible CDHP is not something that employers should rush into. He adds that HR and benefit managers can also help to alleviate some of the expected employee unrest from the change by offering resources.
“As you’re asking them [employees] to be the consumers of care, you have to give them the tools to survive and thrive, or else you are kind of throwing them out into the wilderness,” Meier says.
Another growing trend for employees, which has been tabbed for movement in 2016 and 2017 by a third of Towers Watson survey respondents, is reducing company subsidies for spousal and dependent coverage. Also, 26% indicate they are considering excluding spousal coverage all together should they have coverage elsewhere.
Last summer, it was reported that UPS planned to stop providing coverage to a portion of employees’ spouses who were able to opt into medical coverage through their own employers. First reported by Kaiser Health News, it was disclosed that more cost associated with the landmark health care law was forcing the move. Of the more than 33,000 spouses being covered, UPS said that about 15,000 could gain coverage from their current employers.
UPS said in a memo to employees that “limiting plan eligibility is one way to manage ongoing health care costs, now and into the future, so that we can continue to provide affordable coverage for our employees.”
While UPS declined to comment on the past spousal health plan coverage change, Paul Fronstin, director of the Employee Benefit Research Institute’s health research and education program, notes that re-examining spousal coverage, as well as looking at HSA-eligible plans and health exchanges, are areas where employer interest is growing.
Fronstin adds that “everything is on the table,” however.
6 bad habits holding you back from success
Originally posted on https://eba.benefitnews.com
Do you feel stuck in a rut? Expected to be shooting up the HR/benefit career ladder at this stage in the game? We all have bad habits, but bringing your baggage to the office can be the difference between soaring or stalling in your career. Ilya Pozin, an entrepreneur and founder of Pluto.TV, Open Me and Ciplex, offers six common workplace bad habits to break if you want to continue moving up the career ladder.
Being a lone wolf
Workplace collaboration is key to success. Even though you prefer working solo, which is in itself a value commodity, it shouldn’t be your only speed. Break the habit by finding a project near and dear to you and ask to be part of the team. Do your best to keep everyone involved and in the loop, and stretch those collaboration muscles.
Saying sorry too much
If you find yourself apologizing too much, it implies you’re making too many mistakes and can undercut your position within the organization. Own your mistakes and reserve the word “sorry” for the truly big mistakes.
Taking on every project
Challenging new projects should excite you, but do you find yourself overdoing it? Learn your limits … if you say yes to every project, you may soon yourself unhappy, burnt out and badly overworked. Nip this habit in the bud. The word “no” is powerful and doesn’t make you look like a slacker when you turn down a project. Be protective of your time and abilities and know when you’ve reached your limit.
Being negative
Nobody is friends with Negative Nancy. If you have a rain cloud over your head every morning, it’s no surprise you’re stuck where you are. Enthusiasm and passion are traits managers look for in their superstars. Sit yourself down and ask the hard questions you’ve been avoiding. If you hate your job, it might be time to look for another opportunity. Ask yourself what would make you wake up excited about your work day, and chase after your dreams.
Doing things the way they’ve always been done
Innovation is a thriving company’s life blood but, for most, doing the same old thing and getting paid for it is enough. Sit down with your boss and ask for an open-door policy to offer feedback. Try to chime in once a month with something new that can help your company grow. Even if some of your ideas aren’t used, you’ll stand out as a forward thinker who cares about the company’s future.
Being disorganized
It’s estimated an average of 9 million hours are spent looking for misplaced things. The impact of that on your work life can really eat away at your true potential. So on your next slow day, take the time to organize your work space and set a plan to stay organized. One of the hardest parts of reorganizing is the initial clean-up of clutter.
Avoiding PPACA excise tax a priority
Originally posted August 20, 2014 by Dan Cook on www.benefitspro.com.
Despite foreseeing record-breaking employee health care costs in the near term, major employers will continue to offer coverage to full and part-time workers. However, coverage for spouses and dependents could be targeted for cutbacks.
That’s the latest from a Towers Watson survey that found employers generally anticipate a 5.2 percent increase next year in health plan costs, which would put coverage cost per employee at an all-time high, Towers Watson said.
However, many employers are planning to make design changes to their plans. Should they occur, employers then project a 4 percent plan increase.
“Despite this cost trend, most (83 percent) employers consider health benefits an important element of their employee value proposition, and plan to continue subsidizing and managing them for both full-time and part-time active employees,” Towers Watson said. Virtually all of these large employers surveyed said they will continue to offer health benefits to employees, with few indicating they were ready to move coverage to a private exchange.
The results were gleaned from the company’s 2014 Health Care Changes Ahead Survey.
Large employers were asked about their health care-related cost concerns for the future. A major one is the excise tax that goes into effect in 2018 as part of the full rollout of the Patient Protection and Affordable Care Act.
“Nearly three-quarters (73 percent) of employers said they are somewhat or very concerned they will trigger the tax based on their current plans and cost trajectory,” Towers Watson said. “More than four in 10 (43 percent) said avoiding the tax is the top priority for their health care strategies in 2015. As a result of the excise tax and other provisions of the health care reform law, CEOs and CFOs are more actively engaged in strategy discussions.”
The objective is not to eliminate or even substantially reduce employee coverage, Towers Watson said, but to continue to manage costs as finely as possible without gutting coverage.
“The emphasis is on achieving or maintaining a high-performance health plan,” said Randall Abbott, senior consultant at Towers Watson. “And CFOs are now focused on a new gold standard: managing health cost increases to the Consumer Price Index. This requires acute attention to improving program performance."
Other key findings from the study:
- 81 percent of employers plan moderate to significant changes to their health care plans over the next three years, up from 72 percent a year ago;
- 48 percent are considering tying incentives to reaching a specified health outcome such as biometric targets, compared with just 10 percent that intend to adopt it in 2015;
- 37 percent are considering offering plans with a higher level of benefit based on the use of high-performance or narrow networks of medical providers, compared with just 7 percent in 2015;
- 34 percent are considering telemedicine, compared with 15 percent in 2015, as employers encourage employees to use such telemedicine strategies as virtual physician office visits to improve access and efficiency of care delivery;
- 33 percent are considering significantly reducing company subsidies for spouses and dependents (10 percent have already implemented such reductions, and 9 percent intend to do so in 2015);
- 26 percent said they are considering spouse exclusions or surcharges if coverage is available elsewhere (30 percent have that tactic in place now, and another 7 percent expect to add it in 2015);
- 30 percent of employers considering caps on health care coverage subsidies for active employees, using defined contribution approaches (13 percent have them in place today and another 3 percent planning them for 2015).
Employers continue to study private exchanges, although 77 percent “are not at all confident public exchanges will provide a viable alternative for their active full-time employees in 2015 or 2016.”
Still, 24 percent said private exchanges could provide a viable alternative for their active full-time employees in 2016. They are looking at three key factors to emerge that would push them in that direction:
- Evidence they can deliver greater value than their current self-managed model (64 percent);
- Adoption of private exchanges by other large companies in their industry (34 percent);
- An inability to stay below the excise tax ceiling as 2018 approaches (26 percent).
“The most effective employers are continually evaluating new strategies for improving health plan performance,” Abbott said. “Examples include a steady migration to account-based health plans, action-based incentives, adoption of value-based payment methods with health plan partners and plan designs that drive efficiencies. Other options are technology-based solutions such as telemedicine, fitness devices or trackers, and social media to encourage employees to take a more active role in both their personal health status and how they use health care goods and services.”