“The implementation of the Patient Protection and Affordable Care Act has made most employers “rethink” their employee benefit offerings, including increasing employees’ share of cost even more via consumer-driven plans.
According to Benefits Selling’s 2014 Employer Survey, 70 percent of employers said PPACA has made them rethink their employee benefit offerings, compared to 30 percent who said the health care reform law hadn’t had any impact on their offerings.
“PPACA definitely changed the way we think about benefits, to the point that we’re actually implementing a marketplace exchange, using Aon’s exchange,” says survey respondent Maggie Peabody, benefit analyst at Orica, an Australia manufacturing and mining company with global operations. Peabody is based in Watkins, Colorado.
Oricia is going through the implementation process so the firm will be ready to offer its employees a range of plans on Aon’s exchange for 2015. The exchange enables Orica to offer its employees “more choices, freedom and flexibility,” as the firm went from offering one medical plan last year to offering five different plans on Aon’s exchange, she said. The plans range from high-deductible plans combined with HSAs, to richer plans without deductibles, lower copays at time of service, but with higher premiums.
The move also helps Orica comply with the minimum benefit requirements of PPACA, while at the same time lowering costs.
“We knew if we didn’t do something like this, in 10 years our costs would have been just out of control,” Peabody said in a later interview. “Aon’s exchange enables us to offer a wider range of plans, because trying to administer five plans on our own would have been a nightmare.”
In the survey, just under a third (30 percent) said they considered moving their employees onto exchanges, compared to 70 percent who haven’t considered such a move. However, most (73 percent) have at least consulted with their broker about the exchanges, while 27 percent had not.
Loretta Camp, principal of Davidson and Camp Insurance Services in San Antonio, said that as a small employer, she was in a position to consider health care “on an individualized basis.” The firm found that employees could get more affordable plans either through their spouses’ employers, or individual coverage either on or off the exchange, so the firm discontinued its own plan.
“I think the biggest hurdle for employers today is making sure our employees understand how to review their benefit options, comparing group plans and individual opportunities both on and off exchange and to quell some of the panic over how the media — and misinformed consumers — is now portraying how horrible health care plans now are because of [PPACA],” Camp says.
In some instances the law has driven up costs, but there are still viable plans available, she says. Moreover, the changes have stimulated new and creative approaches to assisting employers and employees in meeting their needs.
“There is a lot of confusion out there right now, but our employees don’t have to be concerned that everything is going to be taken away from them,” Camp says. “As employers, it’s our responsibility to focus on the meat of the law, keep them informed of pertinent changes, and provide resources for personal assistance. This is just a start, and there will surely be more changes to come, but people need not be fearful.”
Another employer who preferred not to be named said that after PPACA’s passage, he chose to keep his staff under 50 to eliminate the requirement to offer health care insurance. He also turned all of his employees into 1099 independent contractors, “to get me out of the employee business.”
“[PPACA] is the worst thing possible and is destroying the best health system in the world,” he says. “I only hope we can keep the pieces together to get another administration in place to cancel and start over again.”
In the survey, nearly two-thirds (64 percent) of respondents said they expected their employees to pick up more of the tab for their own benefits in the coming year, as opposed to 36 percent who did not.
Similarly, 63 percent said their company has considered expanding the use or implementation of consumer-driven plans, in which employees use health savings accounts, health reimbursement accounts or similar medical payment products to pay for lower-cost health care expenses directly, in conjunction with a high-deductible plan that protects them from catastrophic medical expenses. In the survey, 37 percent did not consider such plans.
Less than half (44 percent) of the respondents said they offer HSAs, while 56 percent don’t. Of those employers that offered the accounts, 47 percent said that less than a quarter of their employees took advantage of this benefit, 27 percent that between a quarter and a half did, 14 percent said that between a half and three-quarters did, and 12 percent said that between three-quarters and all of their employees did.
When asked which benefits were considered most important to their employees, the vast majority (77 percent) said health insurance, while only one in 10 said consumer-driven health care was most important; dental, 3 percent;life insurance, 2 percent; short-term disability, 2 percent; executive benefits, such as supplemental executive retirement plans, executive life insurance, executive long-term disability income benefits, supplemental medical reimbursement plans, 2 percent; vision, 1 percent; long-term disability, 1 percent; limited medical plans, 0 percent; long-term care insurance, 0 percent and other, 4 percent.
Survey respondents were also asked about other types of benefits.
Orica previously offered voluntary benefits, but the Aon exchange has a wider array of choices for its employees, Peabody says.
Davidson and Camp is offering its employees different supplemental plans “to help fill the gaps,” such as hospital indemnity, accident, cancer, critical illness and specified disease plans, in addition to the increased employer-paid life insurance, dental plan, employee assistance program, will preparation service, and travel accident plans, and short-term and long-term disability, Camp says. The firm had been offering such benefits before, but since it discontinued medical coverage, it decided to enhancing the benefits and absorb more of the costs.
Half of the survey respondents said that their company has either implemented or had planned to implement wellness or disease management programs to contain costs, while 50 percent had not.
Peabody says her firm has offered a wellness program with health risk assessments, but for this year the company is suspending the program because of all of the changes it is implementing. However, in 2016, Orica plans to launch a new expanded program that includes the use of biometrics to enable employees to receive discounted premiums.
Slightly half (52 percent) of the survey respondents offered flexible working benefits, compared to 48 percent that did not. However, 68 percent offered retirement benefits, as opposed to 32 percent that did not.
Most (77 percent) of the respondents said that their employee benefits spending was influenced by the economy, compared to 23 percent who did not feel that way.
The survey also delved into how employers felt about their brokers’ service, though 24 percent said they did not use a benefits broker or an agent. Of those who did use a broker or an agent, the vast majority (84 percent) were commission-based, as opposed to 16 percent who were fee-based.
When asked how often did they communicate with their broker, 7 percent of respondents said once a day; 13 percent said multiple times per week; once a week, 6 percent; multiple times per month, 27 percent; once a month, 10 percent; multiple times per year, 23 percent; and once a year, 14 percent.
The vast majority (86 percent) of those respondents said they were satisfied with their broker communication, while 11 percent said they wished their broker would communicate more often and 3 percent said they wished it were less often.
Roughly half (49 percent) said their broker helps conduct their enrollment, while 27 percent said their broker does it for them, and 24 percent said their broker has nothing to do with their enrollment.”
Fortunately for brokers, the vast majority (82 percent) of those who use brokers said they haven’t thought about dumping them and “going it alone.” Still, 18 percent did.