In the year since health care reform became law, employers have maintained health care benefits, implemented cost-sharing methods and assessed the long-term impact of reform on their organizations, according to findings from a newly released survey.
Health Care Reform: Employer Actions One Year Later, issued by the International Foundation of Employee Benefit Plans, is the second in a series of surveys on the impact of the Patient Protection and Affordable Care Act on single employer plans. The foundation is a non-profit organization that conducts studies on employee benefits, compensation, and financial literacy education and information.
“For the most part, employers have moved beyond the wait-and-see phase they were in just a year ago and are beginning to take action,” said Sally Natchek, senior director, research at the foundation. “Although many employers are concerned about rising costs, very few have drastically altered or ended their health care benefits. Most employers remain committed to offering quality health care benefits to their employees.”
Of particular interest, the data show nearly one in five employers adopted or expanded their use of wellness initiatives in the last 12 months (18%), and more than one-quarter (27%) reported they plan to do so in the next 12 months. Additionally, 38% are expanding the use of financial incentives to encourage healthy behaviors, and 27% are adopting or expanding their disease management offerings.
Other Findings
A majority of employers (60%) have conducted an analysis to determine how health care reform will impact their 2011 plan costs. Among respondents analyzing cost impacts, the largest proportion (36%) estimates health care reform legislation will increase their organization’s health care costs by 1%-2% in 2011. Although extending coverage to adult children to age 26 is seen as the top driver of cost increases, administrative costs and cost-shifting due to reduced Medicare and Medicaid payments to providers have emerged over the past year as major concerns.
To help ease increased costs brought on by health care reform, 40% of employers are increasing employees’ share of premium costs, 29% are raising in-network deductibles and 28% are increasing employees’ proportion of dependent coverage cost. Many employers also plan to increase out-of-pocket limits and co-payments or coinsurance for primary care (27% and 24% respectively).
Only 2.6% of respondents plan to cut health benefits for new hires, 1.6% plan to drop dependent coverage, 0.9% will close health benefits to new hires and 0.8% will discontinue health benefits for active workers or retirees. Less than one percent of employers (0.7%) plan to stop providing employees with health care coverage in 2014, when “play or pay” provisions become effective.
Additionally, although required only to extend health care benefits to dependents until age 26, 60% of employers are going a step further and changing the eligibility requirements for dependents in other benefit plans (e.g., dental, vision, etc.) to conform to the requirements of their medical plans.
High-Deductible Plans
Employers continue to perceive value in the role of high-deductible health plans (HDHPs) for cost management. Approximately one-third of responding organizations are increasing their emphasis on or assessing the feasibility of such plans with a health savings account (HSA).
Employers continue to perceive value in the role of high-deductible health plans (HDHPs) for cost management. Approximately one-third of responding organizations are increasing their emphasis on or assessing the feasibility of such plans with a health savings account (HSA).
Grandfathered Status
Even though employers report several benefits of maintaining their grandfathered status—namely that their plans are exempt from the appeals process and the requirement to provide coverage for preventive care with no cost sharing or annual limits—just 30% expect to maintain grandfathered status beyond the next three years.
Even though employers report several benefits of maintaining their grandfathered status—namely that their plans are exempt from the appeals process and the requirement to provide coverage for preventive care with no cost sharing or annual limits—just 30% expect to maintain grandfathered status beyond the next three years.
“Maintaining grandfathered status will be very challenging for employers,” Natchek said. “Plans can lose the status in numerous ways including reducing benefits, raising coinsurance or significantly raising co-payments or deductibles. To remain grandfathered, an employer will be able to make only limited changes in their health care plan. This does not appear feasible for most organizations.”
About The Survey
Responses were received from 1,350 individuals including benefits and human resources professionals, general and financial managers, and other professionals. Those asked to participate in the survey are members of the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialist.
Responses were received from 1,350 individuals including benefits and human resources professionals, general and financial managers, and other professionals. Those asked to participate in the survey are members of the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialist.
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