Health Plan Cost In-creases of Nearly 4% Projected For 2020

Health Plan Cost In-creases of Nearly 4% Projected For 2020

Health benefit costs are expected to grow by almost 4% in 2020, according to the early results from a survey of employer-sponsored health plans released by human resources consultancy Mercer on September 19.

Based on responses from 1,511 U.S, employers, the survey projects that the average total health benefits cost per employee will rise by 3.9% in 2020. Researchers observed that while this growth rate continues the trend of low single-digit increases that began in 2012, health benefit costs are still rising faster than overall inflation.

The survey also found that cost-shifting to employees is expected to play a smaller role in 2020 than in recent years, with just 43% of responding employers saying that they intend to raise deductibles or otherwise cut benefits to hold down costs in 2020. Researchers reported that the underlying medical trend, or the amount costs would increase if employers renewed plans without making any changes, has decreased from 8% in 2014 to 5.2% in 2020, which may have eased some of the pressure to make short-term cost reductions.

Researchers also pointed out that in recent years, employers have been adopting strategies for reducing costs via improved health outcomes, such as providing targeted support for specific health conditions and encouraging plan members to use higher-quality providers. For example, 39% of employers with 500 or more employees surveyed in 2019 reported that they provide access to a Center of Excellence (COE) for cardiology, bariatric surgery, cancer, and other complex treatments. Moreover, 16% of these employers said they steer employees to the COE through lower cost-sharing, or even require them to use it.

The survey findings further suggested that in support of providing higher-quality care, employers continue to add technology-enabled programs designed to help members with specific health issues, such as diabetes, insomnia, and infertility. The results showed, for example, that 62% of respondents with 500 or more employees reported offering one or more of these targeted solutions in 2019, compared to 55% in 2018.

In addition, the survey found that access to health benefits information and resources is increasing, as of the employers with 500 or more employees surveyed in 2019, 40% said that all or most of their benefit offerings are accessible to employees on a single, fully-integrated digital platform, most often through a smartphone app; up from 34% surveyed in 2018.

Employee Benefit Packages Show Signs Of Stability Despite Cost Pressures

Employee Benefit Packages Show Signs Of Stability Despite Cost Pressures

U.S. employers have largely maintained the status quo in terms of their benefit offerings in 2019, but they are also looking for opportunities to make changes to their benefit programs that lower costs while still enabling them to attract and retain talent in a competitive labor market, according to the findings of a survey published by professional services provider PwC in June 2019.

The “Health and Well-being Touchstone Survey,” which was completed in spring 2019, asked U.S. employers and employees for their views on the current and projected status of their rewards programs. The results indicated that employers expect medical costs to increase 6.5%, or 4.2% after plan changes, from 2018 to 2019. According to researchers, this trend is consistent with the actual increase of 6.2% from 2017 to 2018.

The survey also showed that employers are still seeking to reduce their long-term retirement benefit liabilities, with the shift away from defined benefit plans and toward defined contribution plans continuing. Specifically, the survey found that just 20% of employers offer a defined benefit plan; and that of those, 37% have frozen entry to these plans for new participants, up from 29% in 2018.

While 82% of the employers surveyed said they believe their current plans and practices provide the framework necessary for retirement readiness, less than half indicated that they think that their employees will be ready to retire when they want to. The findings also revealed that the prevalence of retiree medical benefits is continuing to decline, with less than one-third of employers reporting that they provide any kind of stipend, subsidy, or coverage for retiree health costs.

The survey results further suggested that employers are increasingly recognizing the importance of managing employee stress, burnout, and other mental health issues, with the share of employers saying they offer stress management programs rising sharply from 40% in 2018 to 61% in 2019. Researchers pointed out, however, that many of these employers are not incorporating their stress management programs into their overall wellness and well-being programs.

Moreover, the survey asked both employers and employees what they consider to be the most important benefit offerings or employer attributes that would attract and retain employees. A comparison of the responses showed that there is a disconnect between the views of employers and employees. For example, 86% of employees, but just 49% of employers, said they think flexibility and work/life balance options are likely to attract talent; while 74% of employees, but only 18% of employers, said they believe inclusion and diversity are important.

The survey also examined the flexibility, time off, and work/life balance benefits offered by employers. The surveyed employers reported offering full-time employees an average of 10.8 annual holidays, 9.1 paid sick leave days, and 12 paid vacation days. Around 60% of employers said they provide parental leave, with maternity leave being slightly more common than paternity leave. The work/life benefits offered most frequently by employers were found to include mothers’ rooms (89%), walking or stand-up desks (80%), free parking (78%), and on-site gym and/or fitness classes (59%).

Health Plan Cost In-creases of Nearly 4% Projected For 2020

Employers Report an Ongoing Commitment to Providing Employee Benefits

While employee benefit offerings are largely holding steady in the U.S. amid a stable labor market and regulatory environment, certain benefits, such as student loan repayment programs, paternity leave, telecommuting, standing desks, and telemedicine are becoming increasingly common, according to the results of an annual survey on employee benefits released by the Society for Human Resource Management (SHRM) on June 25.

In the survey, which was conducted in April 2019, 2,763 randomly selected HR professionals were asked whether over the past 12 months their organization had increased, decreased, or sustained their benefit offerings in certain categories. When the respondents were asked which benefit categories they consider most important, the leading answer was health care, followed by investment and retirement, leave, and flexible working.

The findings indicated that family-friendly and wellness benefits in particular are continuing to grow in popularity. The results showed, for example, that 60% of the employers surveyed currently offer standing desks, compared to one-quarter just five years previously. The survey also found that onsite lactation or mother’s rooms are offered by 51% of employers, up 16 percentage points from 2015.

The survey provided clear confirmation that leave and flexible working benefits are gaining traction, with telecommuting on a part-time basis now being offered by 42% of employers. The results also indicated that the share of employers offering family leave above the time required by the Family and Medical Leave Act (FMLA) increased by six percentage points between 2018 and 2019. Moreover, the findings showed that although the share of employers offering paid leave benefits for new fathers went up only slightly between 2018 and 2019, it has increased 14 percentage points over the past five years.

In terms of health care benefits, the survey showed that 70% of respondents have maintained their health care benefits at existing levels in 2019, with just 20% saying they have increased benefits, and only 3% reporting that they have decreased benefits. The findings also showed that of the health plan types, preferred provider organizations (PPOs) continue to be the most popular health insurance option, with 85% of the organizations surveyed indicating that they offer PPO plans. The second-most popular plan type was found to be high-deductible health plans linked to a savings or spending account, with 59% of respondents reporting offering such plans.

Moreover, the results indicated that the share of employers providing telemedicine and telehealth services increased by 10 percentage points between 2018 and 2019. Additionally, 71% said they offer long-term disability benefits, 61% indicated that they offer short-term disability benefits, and 27% said they offer accident insurance.

While still relatively rare, the share of employers offering company-provided student loan repayment benefits was found to have risen from 4% in 2018 to 8% in 2019. According to researchers, this category is expected to gain additional traction if pending Federal legislation is approved. A further 56% of respondents said they offer tuition assistance.

In addition, the findings indicated that the share of companies offering relocation lump-sum payments increased by six percentage points between 2018 and 2019. Researchers noted, however, that while housing and relocation benefits were once commonly provided by employers, they are now offered by less than one-third of the organizations surveyed.

Voluntary Benefits Integral to Employee Benefit Strategy

Voluntary Benefits Integral to Employee Benefit Strategy

Though long dismissed as “something nice to offer,” a growing share of U.S. employers now see voluntary benefits as an integral component of their core employee benefit strategy, and are expanding the range of voluntary benefits and services they offer to help workers improve their overall financial well-being and security, the results of a survey released on April 10 by human resources consultancy Willis Towers Watson indicate.

Conducted in November 2017, the survey includes responses from 336 U.S. employers representing more than 4.3 million employees and a wide range of industries. The survey showed that just 5% of the employers polled say voluntary benefits have little importance to their employee value proposition and total rewards strategy. Researchers noted that this finding represents a considerable shift in attitudes from five years ago, when 41% of the employers surveyed said voluntary benefits have little importance.

The findings also indicated that while just 36% of respondents see voluntary benefits as an important component of their current employee value proposition, more than two-thirds (69%) believe voluntary benefits will become an important component of their employee value proposition within three to five years.

Moreover, the survey showed that education benefits that address rising student loan debts and support parents saving for their children’s future college cost are becoming increasingly important financial well-being benefits. While 8% of the employers surveyed said they currently offer student loan consolidation programs, 34% expect to have such programs by 2021. Similarly, whereas 10% of respondents said they currently offer student loan refinancing arrangements, 35% anticipate providing such arrangements by 2021.

When asked about other voluntary benefits they currently offer and might offer within the next three to five years, 36% of respondents said they currently provide identify theft protection, and 63% said they anticipate offering it by 2021; and 34% of respondents reported that they currently offer pet insurance, and 57% said they expect to offer it by 2021.

The survey also showed that growing shares of employers are offering health care-related voluntary benefits. For example, 16% of respondents said they currently provide long-term care insurance, and 33% said they expect to offer it by 2021; 43% of respondents reported that they currently offer critical-illness insurance, and 71% said they anticipate providing it by 2021; and 24% of respondents indicated that they currently offer hospital indemnity, and 50% said they anticipate offering it by 2021.

From Benefit Trends Newsletter, Volume 61, Issue 5

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 © 2018 Liberty Publishing, Inc. All rights reserved.

Employers Recognize the Value of Integrating Health Care Benefits

Employers Recognize the Value of Integrating Health Care Benefits

Employers are increasingly redesigning their health care benefits by integrating their medical, disability, and other health care-related benefits based on the understanding that integration can improve care, generate cost efficiencies, and contribute to employee retention, the results of a study released by health insurer Anthem Blue Cross indicate.

The findings of the biennial “Integrated Health Report,” released on February 20, are based on a survey of 222 employers with 100+ employees. The survey found that more than 71% of respondents reported that they are either actively integrating or considering integrating their medical, pharmacy, dental, vision and/or disability benefits under their health and wellness programs in the next five years, up from 60% of respondents in the survey conducted in 2016.

The report cited previous research showing that when medical, pharmacy, dental, vision, and disability benefits are delivered in silos with little or no interaction between them, employees and health care providers are often left with a disconnected view of total body health. By contrast, the study said, integrated health care is an employee benefits strategy that connects benefits data to the employer’s health management program based on member claims and population insights, which provides a fuller picture that ultimately delivers better health outcomes and cost efficiencies.

The report found that among the employers surveyed who said they are actively integrating or considering integrating products, nearly 100% of them reported having integrated pharmacy, vision, dental and/or disability benefits with medical benefits.

The survey also showed that while the cost and ease of administration remain important business considerations for employers, there is a noticeable shift toward attracting and retaining a more satisfied and healthier workforce driving integration. The survey found that 88% of respondents believe that integrated health care benefit programs make an organization a place where people want to work, 90% think that offering integrated health care benefits makes a compensation package more attractive, and 86% believe that integrated health care benefits reduce employee turnover or attrition.

When the employers currently integrating or considering integrating health care benefits were asked how they measure the success of integrated health care benefits, 55% said they measure it by examining member engagement, and 27% said they measure it by estimating how much they are saving. 

From Benefit Trends Newsletter, Volume 62, Issue 4

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 © 2019 Liberty Publishing, Inc. All rights reserved.

Workplace Benefit Offerings Show Signs Of Declining

Workplace Benefit Offerings Show Signs Of Declining

While the labor market remains tight, the percentage of employees who report that their employer offers benefits has been declining, according to the results of an annual survey that looks at employee satisfaction with their workplace benefits conducted by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates.

The survey of 1,025 U.S. workers aged 21-62 was conducted on June 21-27, 2018. When the respondents were asked what benefits their employer provides, health insurance was the most frequently cited (78%), followed by dental insurance (68%), and retirement savings plans (67%). Researchers pointed out, however, that fewer employees were receiving benefits from their employer in 2018 than in 2017, and that declines in the shares of workers reporting that their employer provides certain types of benefits were observed for eight out of the 10 most popular benefit offerings between 2017 and 2018.

The results also showed that just 12% of the employees surveyed reported accessing voluntary benefits, and that of these respondents, 61% said they do so because it is less expensive to purchase the benefit through their employer than on their own.

At the same time, however, the survey found that employees are generally satisfied with their current benefits package, with 51% of respondents reporting that they are very or extremely satisfied with their benefits, another 30% saying they are somewhat satisfied, and only 9% saying they are not at all satisfied.

When asked about their financial worries, the workers surveyed reported feeling more stressed by the prospect of not saving enough for retirement than about any other financial concern that might be addressed through employee benefits. Broken down by generation, the survey found that baby boomers were more likely than millennials to report that saving enough for retirement is causing them financial stress, while millennials were more likely than baby boomers to say that paying monthly bills and student loan repayment is causing them financial stress.

In addition, just 37% of the surveyed employees said that their employer or benefits company provides no education or advice on benefits. However, depending on the benefit, between 64% and 76% of respondents reported that they find it either somewhat or very easy to find information on what is included, and 64% said they are extremely or very confident in their ability to make benefits decisions.

The survey results emphasized that health care is a critical issue for employees, with 73% of respondents reporting that health insurance is one of the top three most important benefits they take into account when considering whether to stay in or choose a new job. By contrast, only 57% of respondents indicated that a retirement savings plan is among the three benefits they value the most.

When asked about their confidence in specific aspects of the health care system now and in the future, just 34% of respondents said they are confident that they are able to afford health care without financial hardship today, and only 30% indicated that they are confident they will be able to afford health care over the next 10 years. Nonetheless, one-half of respondents with health insurance coverage said they are extremely or very satisfied with their current health plan, and 65% reported that they are generally confident that their employer or union will continue to offer health insurance in the future.

The results suggested that employees’ dissatisfaction with health insurance is mainly related to cost: just 22% of respondents said they are extremely or very satisfied with the cost of their health insurance plan, and only 21% indicated they are satisfied with the costs of health care services not covered by insurance. In addition, 47% of the workers surveyed reported having experienced an increase in health care costs in the past year; and of these respondents, substantial shares said they had decreased their contributions to retirement plans (24%) or to other savings (41%).

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 © 2019 Liberty Publishing, Inc. All rights reserved.