Consumer-directed health plans will remain a key strategy for avoiding the ACA “Cadillac” tax on high-cost plans, while employers project their per-employee health benefit costs to rise an average of 4.2 percent next year, after they’ve made planned changes, according to the early responses from the recent National Survey of Employer-Sponsored Health Plans.The survey, which is still in the field, also predicts that for the fifth straight year, employers will hold the total growth of medical benefit costs to less than 5 percent. This is consistent with actual cost growth in 2014 (3.9 percent) and the expected cost growth for 2015.
Changes that employers expect to make in their benefit plans, if they haven’t made them already, include raising deductibles, offering more consumer-directed plans (CDHPs), and switching carriers. One in four of the survey respondents said they are considering adding a CDHP or taking steps to increase enrollment in an existing CDHP specifically to help avoid the ACA excise tax — in addition to the 41 percent of employers that have already acted on this strategy.
Other strategies that employers are considering taking to avoid the excise tax include:
- Adding or expanding programs to improve employee health and well-being (42 percent of respondents are considering this)
- Eliminating health care flexible spending accounts (21 percent of respondents are considering this)
- Moving to a private benefits exchange (23 percent are considering this option)
Rae Shanahan, our chief strategy officer here at Businessolver, stated that “Regardless of what changes employers choose to keep costs down for the company and the employees, it’s obvious that any successful strategy will require — in fact, employees will increasingly demand — clear, meaningful communication about their choices and better tools to help them make decisions based on more than cost.”
Our own research here at Businessolver has found that 6 percent of employees find the insurance purchase process confusing, 38 percent aren’t very confident that they made the right decisions during their last annual enrollment, and a whopping 42 percent don’t believe they use their benefits effectively.
Employees need tools that go beyond calculating the cost of their options, that take into account the reality that buying health insurance is stressful, confusing, and simply something most employees want to get out of the way was quickly as possible. Employee benefit enrollment sites that that mistake that reality with consumer retail experiences like choosing a vacation destination are not doing employees any favors.
Our MyChoice™ benefits recommendation engine, for example, factors in the financial, physical and emotional side of the benefits selection process. The result is a personalized strategy that helps drive decision-making based on factors including:
- Financial risk tolerance
- Emotional risk tolerance
- Risk behavior
- Consumer behavior
- Health status
- National health data
But even without all the various changes that employers are planning — and this is very encouraging — the survey pointed to a slow-down in the underlying growth of the cost of medical benefits. Even if employers made no changes to their medical plans, they would expect costs to rise an average of 6.4 percent next year. That’s down from 7.1 percent for 2015 and is the lowest rate of underlying cost growth seen since Mercer began collecting this information in 2005, the latest report said.
These results are based on responses to Mercer’s National Survey of Employer-Sponsored Health Plans from more than 1,200 employers who submitted the survey by September 1, 2015.