Benefits

Despite Anticipated Costs, Most Employers to Keep Health Care Benefits

By Rebecca Moore editors@plansponsor.com | June 08, 2011
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June 8, 2011 (PLANSPONSOR.com) – A survey released by the International Foundation of Employee Benefit Plans finds 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 health care costs in 2011 by 1%-2%. Although extending coverage to adult children to age 26 is still 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, according to a press release.  

To help ease the 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 copayments or coinsurance for primary care (27% and 24% respectively).   

Although many employers are looking to employees to help manage rising costs, very few plan to eliminate or reduce their health plan benefits as the result of health care reform. Just 2.6% 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. Only 0.7% of employers 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.