With the cost of group health insurance on the rise, many employers are focused on cutting the cost of healthcare benefits. An overwhelming trend in controlling healthcare costs is to shift the costs to the employees.
The National Business Group on Health (NBGH) recently conducted a survey of 136 large employers about health benefit plans and how they plan on cutting their health benefit costs for 2015.
Trend #1: Shifting Healthcare Costs to Workers
According to the report, health care benefit costs are expected to increase 6.5 percent in 2015. This has caused employers to reconsider their benefit offerings and re-evaluate their health benefit costs.
Many employers will be offering low-benefit plans. In fact, 81 percent will only offer plans that meet the Affordable Care Act’s (ACA’s) tests for minimum value and affordability. Although the company meets the requirements for the employer mandate, and the employees will be able to avoid paying the individual shared responsibility fees, these plans will offer employees little coverage and little protection in the case of an illness.
Exposing employees to a potential risk for incurring large medical bills isn’t the only downfall of using this method to control health benefit costs. Since employers are offering this low-benefit plans that still meet the ACA’s requirements, they are disqualifying their employees from obtaining access to premium tax credits for the individual health insurance Marketplace, where they could get more comprehensive and more affordable health insurance.
The trend of employers shifting healthcare costs to their workers has been echoed in other reports as well. According to a recent poll by Arthur J. Ghallagher & Company, the most popular methods of health benefit cost containment involved increasing employee liability. In fact, shifting the costs was in the top four out of five strategies:
Increase employees’ plan contributions
Increase out-of-pocket maximums
Change plan carrier
Trend #2: Shifting Towards a Consumer-Directed Health Plan
Another trend for cutting health benefit costs revealed in the survey is the shift towards a consumer-directed health plan (CDHP). CDHPs come in various forms, but most commonly a CDHP means offering a high-deductible health plan paired with a spending account for out-of-pocket costs such as an HSA or Integrated HRA.
According to the NBGH report, “the number of employers offering workers a consumer-directed health plan (CDHP) as the only health benefit option is expected to surge by nearly 50 percent next year.” In fact, the report points out that 57 percent of employers surveyed are implementing or expanding CDHPs.
Surprisingly, there was a 50 percent increase in employers who are planning to offer a CDHP as their only form of health benefits next year. Almost a third (32 percent) of employers plan to offer this as their only benefit in 2015.
Trend #3: Shifting Towards Individual Health Insurance
While not mentioned specifically in the NBGH report, there are other options rather than simply offering the bare minimum health insurance benefits or other trends of shifting healthcare costs to workers. Employers are transitioning to health insurance allowances (aka “pure defined contribution health benefits”) because this strategy offers predictable costs to the employer, while giving employees access to quality health insurance.
By providing their employees with an allowance to spend on individual health insurance, employees are able to access more comprehensive, less expensive healthcare that fits their individual needs.
Health insurance allowances reduce the cost and time associated with traditional health insurance, while still providing a health benefit for retaining and recruiting top employees.
How do you plan on cutting your health benefit spending in 2015? Leave a comment below.