Employers face two important challenges with their benefit programs: meeting employee demands for personalized coverage and continuing to manage costs. This year, employers are exploring some innovative approaches to achieving both goals. Many of these changes also serve to drive consumerism and healthier behaviors—leading to both short- and long-term wins for employers and employees.
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A new market report published by DirectPath in collaboration with Gartner identifies the trends in health plan offerings that have shaped a new industry standard as employers grapple with a shift in employee demographics and rising healthcare costs. The 2019 Medical Trends and Observations Report is based on an analysis of more than 1,000 employee benefits plans from nearly 200 companies.
Here are the trends HR strategists are embracing this year to serve their employees better.
Mixed Bag of Voluntary Benefits
Employers are expanding their menu of voluntary benefit offerings to support the work/life balance the newer generations are demanding. In addition to the typical voluntary offerings of the past—such as dental, vision and yes, even pet insurance— more employers are now offering such family-friendly offerings as adoption assistance and backup child care, with 19% and 17% of businesses offering these benefits, respectively.
Other popular voluntary benefits include those focused on financial protection, such as financial wellness checks, legal services, and ID theft protection (up 6% this year) as well as the more traditional supplemental life and accidental death and dismemberment insurance.
Changing Plan Structure
Employers have increasingly recognized that they may have reached the limit on what employees can accept in terms of cost-shifting through increased deductibles, copays, and lower coinsurance. Employers are taking a new tack, with many adopting more unusual approaches to controlling costs. Among the more interesting include:
- No longer covering out-of-network expenses under any plan option, except in the case of emergency and certain mental health services;
- Covering preventive medications at no cost—or at a lower cost than generics;
- Dropping HSA contributions and wellness incentives and replacing them with an “old school” cafeteria plan, where employees are given a flat dollar amount to spend on the coverages they prefer; and
- On-demand insurance—combining a core medical plan with the ability to purchase “add-on” coverages for specific treatments or procedures on an as-needed basis.
The first approaches help encourage employees to make cost-effective decisions when they need care (driving use of in-network providers) and adherence to treatment plans (when prescriptions are free), while leaving employees ultimately in control of the impact on their wallets. The others respond to employee demand for the ability to customize and personalize their coverage package to best reflect what they need at their stage in life.
To that end, this year’s study saw an uptick (from 30% to 41%) in employers offering high-deductible plans (particularly among small and mid-size organizations). However, these plans were typically just one of several offerings rather than the only option. In fact, the average employer in our database sponsored five different plans.
While just 51% of employers in our database offer tax-advantaged accounts such as health savings accounts (HSAs) and health reimbursement accounts (HRAs) in conjunction with their high deductible health plan (HDHP), the vast majority have focused on HSAs (79% versus 21%). Interestingly, this year, employer base contributions to both types of accounts declined. However, many employers are offsetting this drop with more robust wellness incentives.
Wellness Incentives
Another area where businesses got creative with their options this year is with wellness incentives, with more employers taking a holistic approach to wellness. Reflecting the current trend to more integrated well-being (physical, mental, emotional, financial, and even community), some employers looked well beyond the traditional definition of wellness to reward employees who receive dental checkups, donate blood, receive a second opinion on medical needs, use a center of excellence—or yes, even complete volunteer work in their communities.
More than 40% of employers are offering at least one incentive—up from 31% last year. While most employers focus their wellness rewards on premium offsets and contributions to tax-advantaged reimbursement accounts, others offer gift cards or prizes for “points” earned over the course of the year. A few employers limit access to certain plan options to those who complete certain tasks.
As in the past, most employers focus their “up front” incentives on wellness actions that provide them with useful data to help tailor future benefit strategies and communications campaigns—e.g., biometric screenings and health risk assessments—or more concrete claims reductions such as tobacco use. These activities are most often rewarded with premium reductions. Other activities, more focused on improving employee health and behaviors, are associated with HSA or HRA contributions—offsetting the reduction in upfront contributions as discussed earlier, while putting the responsibility for earning additional funds on plan participants.
Between offering more opportunities for personalization and exploring new ways to drive healthier behaviors, employers are clearly open to new and cost-efficient ways to respond to the needs of their workforce. As economic pressures and low unemployment continue, and workforce demographics continue their shift, employers will likely see choice and wellness as more than just cost-management tools. They will then embrace these as important recruitment and retention elements of their benefits strategies.
 Kim Buckey is DirectPath’s key advisor and senior subject matter expert on new and evolving compliance issues that affect employers as a result of the Affordable Care Act. Kim, who founded and directs the DirectPath compliance communications team, works closely with sales, explores the potential impact on customer segments to develop new products and services to support current and anticipated needs.Kim has more than 40 years of communications experience, 35 of which focus on the delivery of compliance communications for health/welfare and qualified (savings/pensions) plans. Kim’s team provides strategy, review and analysis, content development and management services for employers, providing guidance on new mandates like the required Summary of Benefits and Coverage (SBC) and the growing trend of Medicare Advantage and its required compliance documents. |