Top 10 Benefits Trends in 2011

In a time of economic uncertainty, employers are looking for innovative ways to balance the needs of their workforce with the realities of the post-Healthcare Reform era. Kristen Allison, president of Burnham Benefits Insurance Services, a leading employee benefits consulting and brokerage firm based in Orange County, offers insight into today’s hottest trends set to shape the industry in 2011.

1. Conquering the challenges of healthcare reform. The Patient Protection and Affordable Care Act of 2010 (PPACA) shook the healthcare world, causing companies to revisit their benefits strategies to determine efficient ways of becoming compliant with the reform’s immediate and long-term requirements.

Chief among their considerations was whether plans could be grandfathered and how to best explain the changes to an anxious workforce in light of new communication and reporting responsibilities. On the upside, companies can begin to explore new benefit design opportunities by becoming engaged in financial modeling and benefit strategy development as they prepare for the many changes that will go into effect from now until 2014.

2. Managing cost containment and rewarding healthy lifestyles. Employee benefit contribution structures held steady over the past decade—even during the height of the recession, when companies froze wages and cut other expenses to prevent layoffs.

With a slight rise in salaries, and premiums that jumped 12 to 15 percent, companies have been forced to share health care’s financial burden with employees. Covered workers contributed on average 2 to 3 percent more for single and family coverage and bore higher out-of-pocket costs for deductibles and co-pays.

Keep up on the differences between California and federal law with ERI’s comprehensive, fully updated desk reference, the 2011 Guide to Employment Law for California Employers.

To keep workers at the top of their game, companies are increasingly taking advantage of carrier-sponsored wellness programs—from weight loss and smoking cessation programs to gym memberships, virtual health coaching, nutrition classes, wellness newsletters, and more. Savvy companies are pegging employee contributions to their participation in these initiatives, with financial incentives such as lower premiums and deductibles tied to the attainment of health benchmarks.

3. Budget-conscious plan design. There’s nothing like limited resources to inspire creative thinking. Budget-minded employers are flocking to high-deductible health plans (HDHP) with health savings accounts (HSA) for cost savings and tax advantages—namely, the elimination of the “use-it-or-lose-it” rule. Others are cutting costs with HMO deductible plans. Limited medical networks and increasing prescription plan deductibles provide additional avenues for saving money. Expect continued innovation this year, as employers focus on new ways to get the most for the money they spend on health plans.

4. Communications game plan. Confusion and uncertainty among employees over how they and their families are affected by health care reform has led companies to adopt proactive and inventive communication strategies to dispel misperceptions, alleviate fears and prepare workers for upcoming changes.

Smart employers utilize the company intranet to submit questions to HR site and host on-site education sessions with brokers to bring clarity to employees, provide critical information, and timely updates. As organizations and employees across the country contend with the reality of reform, this trend will continue to evolve.

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5. Controlling costs with claims analysis. While it is important to understand the financial performance of a plan and the financial justification of premiums, employers are using claims data to take more focused directions on plan design, wellness initiatives, and communication. The data mining of claims allows employers to weigh the financial costs and member impact of any changes to their plans and helps balance disruption and cost containment. Even a review of a group’s top disease states or major diagnostic categories provides focus for wellness initiatives and opportunities to avoid claims, giving employers more control of their healthcare costs.

Tune in tomorrow for Allison’s remaining 5 top trends for 2011.

Executive Summary: Healthcare Reform for California Employers