Health Benefit Costs Grew a Modest 2.6% In 2017

Health Benefit Costs Grew a Modest 2.6% In 2017

The annual cost increases for employer-sponsored health plans remained low in 2017, even without employers moving significant numbers of employees onto high-deductible plans, the results of an annual survey of employer-sponsored health plans conducted by human resources consultancy Mercer indicated.

The survey of a nationally representative sample of 2,481 employers was conducted during the summer of 2017. The results showed that the average total health benefit cost per employee rose 2.6% in 2017, up just slightly from an increase of 2.4% reported in 2016. Citing previous survey data, researchers observed that cost growth has averaged just 3.3% annually over the past five years, compared to 6.2% over the prior five-year period.

But while acknowledging that these growth rates have been modest, researchers warned that health coverage continues to represent an enormous expense for both employers and employees. The survey results showed that for employers, the average total cost of health benefits amounted to $12,229 per employee, or 14% of total payroll, in 2017; and that even among smaller employers (those with 10-499 employees), which typically offer less generous benefits, the average total cost of health benefits came to $11,527 per employee in 2017. The findings further indicated that in 2017, employees were paying, on average, 24% of the total cost of coverage through paycheck deductions.

Researchers also observed that while employee contributions as a percent of premium have been stable for decades, over the past 10 years, employers have assigned employees more responsibility for cost at the point of service, both by increasing deductibles and by adding high-deductible consumer-directed health plans (CDHPs) with health savings accounts (HSAs). The survey found that in 2017, deductibles in traditional preferred provider organization (PPO) plans continued to increase, to nearly $1,000 on average for employers with 500 or more employees and nearly $2,000 for those with 10-499 employees.

However, after years of steady growth, enrollment in CDHPs was found to have risen by only a single percentage point in 2017, from 29% to 30% of all covered employees. The survey indicated that in 2017, just 10% of employers with 500 or more employees offered a CDHP as the only plan at their largest worksite, and that most mid-sized and large employers offered a CDHP alongside higher-cost plans with more generous benefits.

The survey results also showed that employers are increasingly offering tools to help employees make more informed health care decisions: 82% of the employers surveyed with 500 or more employees said they provide a “transparency tool,” or an online resource to help members compare the prices and the quality ratings of different health care providers.

In addition, the survey found that growing numbers of employers are helping plan participants defray the cost of care by promoting access to less expensive services, such as telemedicine. In 2017, 71% of the employers surveyed with 500 or more employees said they offered telemedicine services as a covered benefit, up sharply from 59% in 2016. While the survey showed that employers with telemedicine programs in use in 2016 reported an average utilization rate of 7%, researchers stressed that this rate is expected to rise as the programs become more established.

Looking at the role played by prescription drug costs in driving up overall health benefit costs, the survey found that drug benefit costs have been rising around 8% annually among employers with 500 or more employees, due in large part to an average 15% increase in spending on high-priced specialty drugs. The findings indicated that 53% of large employers are attempting to help keep these costs in check by steering employees to specialty pharmacies, which provide cost management strategies that can also prove less costly and more convenient for patients.

From Benefit Trends Newsletter, Volume 60, Issue 12

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Workers Confident About Benefit Choices Despite Knowledge Gaps

Workers Confident About Benefit Choices Despite Knowledge Gaps

American workers are feeling increasingly confident about their benefit choices, but they may not fully understand the choices they are making, and continue to struggle to understand the benefits information their employer provides, according to the results of two studies that analyzed the trends, attitudes, and use of employee benefits among the U.S. workforce released by voluntary insurance benefits provider Aflac.

A national online survey of 5,000 U.S. workers, conducted January 26-February 17, 2017, found that of the respondents who receive benefits from their employer, 67% of respondents are confident they understood all of the benefits they signed up for; and 55% agreed that completing their annual health benefits enrollment made them feel secure, like being tucked in at night, or accomplished, like they just finished a marathon.

However, the survey results also revealed that large shares of employees may be making benefit decisions without complete knowledge of the plan. When asked about their understanding of specific features of their health care plan, like deductibles, co-pays, and providers in their network, only 24% of respondents answered that they understood everything.

The findings further indicated that 67% of the surveyed employees say they find reading about their benefits is complicated, long, and stressful. When asked what changes employers could make to improve their benefit enrollment experience, the top responses were “simpler language” and “more options.”

The results also suggested that satisfaction with benefits is linked to job satisfaction: 78% of respondents who said they are extremely or very satisfied with their benefits also indicated they are extremely or very satisfied with their job, compared to 45% of those who reported they are somewhat satisfied with their benefits and 30% of those who said they are not very or not at all satisfied with their benefits.

A separate survey was conducted August 24-28, 2017, among 1,000 20- to 26-year-olds, employed either full or part time. The aim of the survey was to find out how Millennials and members of Generation Z who are now entering the workforce feel about their first benefits enrollment experience.

Of the respondents currently on their parents’ health care plan (35%), more than half (54%) said they are leaving their parents’ plan in the next year to purchase their own benefits for the first time. More than two-thirds (69%) of those on their parents’ plan admitted they do not know how much their health insurance coverage costs, even though 41% indicated they make financial contributions to their parents’ plan.

The results also showed that 22% of the young adults surveyed associate health care benefits with independence, but only 19% said they feel confident, and just 31% said they feel prepared to select their own health care plan. When asked to identify their most pressing concerns about choosing their own plan, the top responses were cost (44%) and understanding how health insurance works (36%).

From Benefit Trends Newsletter, Volume 60, Issue 11

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Employers Anticipate Substantial Increases in Health Benefit Costs in 2018

Employers Anticipate Substantial Increases in Health Benefit Costs in 2018

In 2018, average per-employee health benefit costs are expected to increase at the highest rate since 2011, driven in part by the high prices of prescription medications and other medical advances, according to the results of a survey of health plan sponsors conducted by human resources consultancy Mercer.

Early responses to a national survey of employer-sponsored health plans of approximately 1,500 employers (who responded by August 15, 2017) indicated that even after they make planned changes, such as raising deductibles or switching carriers, employers predict that health benefit costs per employee will rise by 4.3% on average in 2018. Researchers noted that this increase is considerably higher than the average annual increase over the past five years of around 3%; and is the highest since 2011, when costs rose 6.1%.

In addition, researchers pointed out that the projected underlying cost growth from 2017 to 2018—or the increase employers would expect if they made no changes to their medical plans—is 6.0%. The survey findings indicated, however, that 46% of employers will take steps to reduce cost growth in 2018.

Researchers also observed that employers must contend with cost increases related to medical advances, including the introduction of new medications used to treat complex conditions like cancer, multiple sclerosis, and hepatitis C. The survey found that between 2017 and 2018, spending on these specialty drugs is expected to increase around 15%, and the overall cost of prescription drugs is on track to rise more than 7%.

Moreover, researchers pointed out that many employers are concerned that they could be liable to pay the excise tax on higher-cost plans, which, after the failure of efforts to repeal and replace the Affordable Care Act, is still scheduled to go into effect in 2020. They cited research showing that 31% of large employers (500 or more employees) would be liable to pay the excise tax in 2020; and that with the tax threshold indexed to inflation and rising at about half the rate of health bene-fit costs, more employers will pass the threshold in subsequent years. According to researchers, many employers are introducing lower-cost, high-deductible health plans to minimize their exposure to the excise tax and to hold down overall health benefit costs.

Researchers also reported that employers are increasingly adopting strategies to manage medical costs without raising employee out-of-pocket spending, including providing care coordination and support for high-cost claimants. In addition, they noted that many employers are addressing quality by using incentives to direct employees to Centers of Excellence and other high-performance provider networks, and are moving away from traditional fee-for-service provider reimbursement and toward new payment models that reflect the value as well as the quantity of the services provided.

From Benefit Trends Newsletter, Volume 60, Issue 10

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Healthcare Costs Expected To Rise By 5.5% In 2018

Healthcare Costs Expected To Rise By 5.5% In 2018

Amid expectations that health care costs will continue to rise well ahead of inflation in the coming years, employers report that they plan to ramp up their efforts to manage costs by, for example, taking advantage of emerging health care delivery solutions and improving their patient navigation and health engagement strategies, the findings of a recent survey by human resources consultancy Willis Towers Watson indicated.

The annual survey was completed by 678 U.S. employers between June and July 2017, and reflects respondents’ 2017 health program decisions and strategies. The survey found that employers expect health care costs to rise by 5.5% in 2018, up from a 4.6% increase in 2017. The findings also revealed that despite uncertainty about the future of health care legislation, employer confidence in offering employee health care benefits has reached its highest level since the passage of the Affordable Care Act in 2010, with 92% of employers saying they are very confident their organization will still sponsor a health plan in five years.

In addition, the survey found that employers are pursuing a wider range of approaches to reduce health care costs and risks than in the past, including encouraging patients to use preferred health care delivery options: 44% of employers said they currently use centers of excellence within health plans, with another 33% saying they plan to or are considering using these centers by 2019; and 78% of respondents said they currently use telemedicine consultations as a supplement to office visits, with another 16% saying they plan to or are considering offering these consultations by 2019.

The survey also showed that the main criteria employers use when selecting carriers and vendors are the competitiveness of negotiated provider discounts (94%), the competitiveness of a vendor’s network access (94%), and the competitiveness of a vendor’s total cost of care (92%).

The results suggested, however, that in selecting partners, employers are emphasizing better outcomes as well as cost savings, especially for high-priority clinical conditions like diabetes, musculoskeletal health, and mental health.

The findings further revealed that employers are taking steps to control pharmacy costs and utilization: 62% of employers reported they are currently evaluating pharmacy benefit contract terms, with another 32% saying they plan to or are considering doing so by 2019; while 60% of employers said they have recently adopted new coverage or utilization restrictions as part of specialty pharmacy strategy, with another 24% saying they plan to or are thinking about doing so by 2019.

The results also indicated that employers are seeking to raise employee health engagement levels by offering workers expanded choice and a more personalized experience. Two-thirds (66%) of employers said they currently add choice in benefit types by offering voluntary benefits, with another 20% saying they plan to or are considering adding such choices by 2019. Meanwhile, 24% of employers reported that they create a virtual shopping experience at the time of enrollment, with another 26% indicating they plan to or are thinking about offering virtual shopping by 2019.

In addition, the survey asked employers what healthcare technology tools they offer their employees. The results showed that 55% of employers currently provide decision-support tools for health navigation, with another 26% saying they plan to or are considering offering such tools by 2019; 19% of employers currently encourage employees to use mobile apps for condition management or health risk reduction, with another 28% indicating they are planning to or considering doing so by 2019; and 26% of employers currently promote the use of wearable devices for tracking physical activity, with another 18% saying they are planning to or considering doing so by 2019.

From Benefit Trends Newsletter, Volume 60, Issue 9

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Many Workers Regret Their Benefit Decisions and Want More Help

Many Workers Regret Their Benefit Decisions and Want More Help

More than one in five American workers report that they often regret their benefit choices, and more than half say they would appreciate more help from their employer in making benefit decisions, the results of a survey on benefit communications conducted by employee communications platform provider Jellyvision have revealed.

The online survey of 2,043 US adults who are employed full-time, are eligible for company-provided benefits, and do not have health insurance through Medicare, Medicaid, or the Veterans Benefits Administration, was conducted from February 24 to March 17, 2017. In addition to finding that 21% of the respondents say they regret some of their past benefit choices, the survey showed that 55% of employees whose companies offer health insurance indicate they would like help from their employer when choosing a health plan, 49% of respondents say they find that making health insurance decisions is always very stressful, and 36% of respondents say the open enrollment process at their company is extremely confusing.

The survey also looked at how workers respond to efforts by their employer’s benefit communications. The results showed that 60% of respondents prefer to receive information about company benefits electronically, and that 20% of respondents say they do not always keep up with benefits correspondence. For example, the findings indicated that some employees do not attend company benefits meetings, never read their company benefit summary plan description, or file or throw away paper benefit materials unread.

In addition, the survey uncovered a number of employee knowledge gaps around health care costs and high-deductible health plans (HDHPs). The findings showed that 54% of the workers surveyed are unsure of when they can make changes to their insurance during qualified life events, and that 43% are unclear on where to direct their health insurance questions. The survey also found that 41% of respondents are unable to identify all of the elements that add up to the full cost of their health care, such as employee and employer contributions and the cost of care; and that 50% of respondents admit they are not knowledgeable about HDHPs.

Researchers emphasized that these knowledge gaps can play a critical role in how employees use and value their benefits. The survey showed, for example, that the employees who claim to be knowledgeable about HDHPs are much more likely than those who said they are not knowledgeable to positively describe the option, with 26% of the knowledgeable respondents, but only 9% of those who said they are not knowledgeable, describing HDHPs as affordable.

As well as asking workers about their employers’ benefit communications, the survey asked respondents to react to a possible repeal of the Affordable Health Act (ACA), particularly as it relates to employer-provided health insurance plans. While 61% of respondents said they do not think a repeal would affect them personally, most expressed support for key ACA provisions on annual (72%) and lifetime coverage limits (74%), coverage of preexisting conditions (80%), free preventative care (78%), and coverage of adult children up to age 26 (67% of those who have children under age 26), with the majority saying such provisions are “absolutely essential” or “very important.”

From Benefit Trends Newsletter, Volume 60, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

CDHP Market Share Continued To Grow In 2016

CDHP Market Share Continued To Grow In 2016

Consumer-driven health plans with high deductibles continued to gain market share in the U.S. in 2016, and appear to be having the intended effect of encouraging the insured to become more involved in their own health care, according to an analysis of survey data published by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates.

The survey of 3,295 adults with private health insurance coverage through an employer or purchased directly from a carrier or through a government exchange was conducted August 11-24, 2016. A report on the findings of the annual survey was released as an EBRI Issue Brief on May 27, 2017. The results indicated that a steadily growing share of Americans with health coverage are in a consumer-driven health plan (CDHP) associated with a high-deductible health plan (HDHP), a health savings account (HSA), or a health reimbursement arrangement (HRA).

While 73% of the privately insured adults surveyed said they are enrolled in a traditional health care plan, 14% indicated they are enrolled in a CDHP linked to an HSA or an HRA, and 14% reported that they are enrolled in an HDHP (with a deductible of $1,300 or higher for single coverage and of $2,600 for family coverage) not linked to an HSA or an HRA. Researchers noted that among individuals with traditional coverage, a growing number have the option to choose a CDHP, and that those who choose a CDHP are remaining enrolled for a longer time.

The survey findings showed that more than half of CDHP enrollees have an HSA, and are taking advantage of growing employer contributions. Among the respondents who said they are enrolled in a CDHP, 56% (16.3 million) indicated they have an HSA; 19% (5.5 million) said they are enrolled in an HRA; and 25% (7.3 million) said they are enrolled in an HSA-eligible health plan, but do not have an HSA.

The study’s authors observed that it is becoming increasingly common for employers to contribute to their employees’ HSAs, and that the dollar amounts of these contributions are rising. In the 2016 survey, 78% of CDHP enrollees reported that their employer contributed to their account that year, up from 67% of those polled in 2014. Of those CDHP enrollees receiving an employer contribution, 20% reported a contribution of at least $2,000 in 2016, up from 10% in 2014; while 42% reported an employer contribution of $1,000-$1,999 in 2016, up from 36% in 2014.

The survey also found that consumer behaviors are linked to CDHP enrollment, as the respondents in a CDHP or an HDHP were more likely than those in a traditional plan to report engaging in cost-conscious behaviors. For example, the survey showed that respondents in a CDHP were more likely than respondents in a traditional plan to report that they had checked whether the plan would cover care (54% vs. 44%), that they had asked for a generic instead of a brand name drug (48% vs. 37%), and that they had used an online cost-tracking tool provided by the health plan (31% vs. 20%). The results also showed that CDHP and HDHP enrollees were more likely than traditional plan enrollees to indicate that they tried to find cost information before obtaining care: nearly one-half of HDHP enrollees and 43% of CDHP enrollees said they had searched for cost information, compared with 32% of traditional plan enrollees.

In addition, the survey respondents enrolled in CDHPs were more likely than those enrolled in HDHPs or in a traditional plan to report that they have a choice of health plans: two-thirds of CDHP enrollees said they have a choice of health plan, compared with 59% of both HDHP enrollees and traditional plan enrollees.

From Benefit Trends Newsletter, Volume 60, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.