Employers Changing Health Benefits, Employees Unprepared

The Aflac WorkForces Report Survey, found in 2013, businesses implemented the following cost-cutting measures for health benefits:

• 28% increased employees’ health care insurance copayments;
• 28% increased employees’ share of premium;
• 22% eliminated or reduced employee benefits; and
• 9% eliminated contributions for family coverage.

In addition, 7% moved employees to private exchanges in 2013, and 7% plan to do so in 2014 (see “Large Employers Undecided About Private Exchanges”). Among these, 37% said they did or will do so because it is financially advantageous to their companies. The survey found 6% of employers offered employees stipends to purchase their own insurance in 2013, and 10% plan to do so in 2014 (see “Companies Looking into DC Model for Health Benefits”). Among these, 33% said they did or will do so because it is financially advantageous to their companies. Finally, 7% offered insurance through the public Small Business Health Options Program (SHOP) exchange in 2013, and 9% plan to do so in 2014. Among these, 27% said they did or will do so because it is financially advantageous to their companies.

Asked about the Patient Protection and Affordable Care Act (PPACA), just 9% of employers indicate they feel extremely or very prepared to address changes to the health care system in 2014. Overall 40% of companies say they understand health care reform extremely or very well, but the number drops to 30% for businesses with fewer than 100 employees. The contrast is even greater when broken down by company size. Of the employers surveyed, 45% say they will rely on brokers or insurance companies to suggest changes to their benefits packages due to the changing health care environment.

The report shows 86% of employees believe the expenses they are responsible for will continue to rise, but many are not prepared to absorb the financial burden. Fifty-three percent say they would have to borrow from their 401(k)s and/or use a credit card to cover costs associated with an unexpected serious illness or accident, and 49% have less than $1,000 to pay for out of pocket expenses associated with a serious illness or accident; 27 percent have less than $500.

In addition, 47% have done nothing to prepare themselves or their families for possible changes to the health care system, and 44% say they will have a difficult time managing their own health care coverage and decisions because they already have difficulty sticking to a budget.

The report also reveals three in five employers strongly or somewhat agree employees need to be more responsible for educating themselves about their health care benefits. Sixty-eight percent of employees believe their companies will educate them about changes to their health care coverage as a result of health care reform.

Only 35% of employees believe their employers communicated extremely or very effectively about health care reform and subsequent changes to their benefits. Only 13% strongly or completely agree their employers have prepared them well for the impact of health care reform.

The 2014 Aflac WorkForces Report examines other benefit trends and attitudes. For the study, Research Now captured responses from 1,856 benefits decision-makers and 5,209 employees across the U.S. For more findings, visit http://workforces.aflac.com/.