Now that 2012 has become reality, figuring out employee health benefits can be a daunting task for both employers and employees.
With looming changes from health care reform and increased cost-shifting to employees, defined contribution health benefits have emerged as the health benefit program of the future. According to leading experts, 2012 promises to be a huge year for defined contribution health benefits. That means any employer or employee considering health benefits in 2012 needs to consider the following.
In a recent survey, McKinsey & Company spoke to a number of employers regarding major trends they see for 2012 and beyond. The following is a summary of those trends to help employers plan their health benefits strategy:
1) Cost-shifting brings companies closer to defined contribution health benefits
The move toward employers shifting more health care costs to employees is helping drive defined contribution health benefits sales. The shift has resulted in a growing trend toward the use of health reimbursement arrangements (HRAs) and medical expense reimbursement plans (MERPs) for tax-free reimbursement of insurance premiums and health care expenses.
2) Health care reform encourages defined contribution health benefits
Health care reform, coupled with rising costs, has employers of all sizes concerned. According to McKinsey & Company, up to 60% of educated employers plan to "definitely" or "probably" pursue alternatives to offering health insurance such as:
- Dropping employer-sponsored coverage,
- Offering employee health benefits using a defined contribution model, or
- Offering health benefits only to certain employees.
Many carriers have added defined contribution health benefit programs to their product offerings, confirmation that defined contribution has become an increasingly important component of health benefit programs.
3) Technology and education are a big part of defined contribution health benefits
One of the primary changes to the health benefits landscape is the move toward more electronic communication, which means that employees will be required to educate themselves and enroll in their own health insurance plans. Private health exchanges and individual health insurance quoting/enrollment technology are expected to be a large component of defined contribution health benefits.
With less than 25% of small businesses expected to offer group health insurance by 2014, have you explored all possible alternatives?