Employers Not Planning to Drop Health Care Benefits

October 23, 2012 (PLANSPONSOR.com) Employers say it will be business as usual in their approaches to health benefits, as they plan for new developments in the coming year due to the Affordable Care Act (ACA).

According to a survey by the Midwest Business Group on Health (MBGH) in collaboration with The Benfield Group, for the next few years, there is little indication that employers plan to drop health care coverage and provide employees a set amount to buy health care coverage elsewhere.   

In preparation for the 2018 40% excise tax on high cost “Cadillac” plans, 31% of employers indicated they plan to reduce their benefits between 2014 and 2016, with 41% responding they will do so in 2017 or 2018.   

Only 9% of employers indicated they plan to participate in state health insurance exchanges when they begin. While there is interest in private health insurance exchanges, at this time only 4% believe they will use these for active employee coverage in 2014 to 2016, while 11% indicated they will move toward private exchanges for post-65 retirees.

Fifty-seven percent of respondents currently offer consumer directed health plans (CDHP), such as health savings accounts and health reimbursement accounts, as a plan option and indicated that this would increase to 62% in 2013 and 71% through 2018. All large-size employers indicated they will offer CDHPs by 2018. More than one-quarter (29%) of all employers will make their CDHP offering their only plan available to employees by 2018.   

More than half (52%) of employers plan to make vision and/or dental coverage voluntary benefits in 2013, increasing to 55% by 2017 to 2018.  

"Employers still believe that health benefits are vital to attract talented employees and maintain a productive work force," says Scott Thompson, president of the health care practice at The Benfield Group. "This research found that most employers, especially those with more than 200 employees, will not drop employee benefit coverage in the foreseeable future. Instead, they'll control costs in other ways like implementing CDHPs, basing premium contributions on the number of dependents covered (unit pricing) and reducing benefits to avoid the Cadillac tax. Employers will continue to be active purchasers of health care."  

The online survey was conducted in August 2012 with 111 respondents from across the U.S. in a variety of industries representing self-insured (77%) and fully-insured (23%) employers.