Employers Offering More Health Care Control to Employees

July 9, 2014 (PLANSPONSOR.com) - Employers seeking to better manage health care costs and benefits are offering employees more choice and ownership for their health care.

For the 2014 benefit year, large employers continued to invest in wellness programs—adding some new programs, expanding incentive dollars and increasing their efforts to engage employees, according to the 2014 bswift Benefits Study. Within large companies, 87% now provide wellness programs for their employees. However, only 69% of small companies offered any wellness program to their employees—a significant drop from the 81% reported in 2013.

The percentage of large employers that are considering a defined contribution approach to health care benefits and/or private exchanges is gradually increasing, from 14% in 2013 to 18% in 2014. This modest increase may come as a surprise, given the extraordinary amount of attention that defined contribution and private exchanges have received in the media. Of smaller companies with 50 to 500 employees, 10% are considering a defined contribution strategy.

Of those large employers interested in the concept of defined contribution, most are looking at it primarily for health/medical benefits—not for the full suite of benefits. Large companies report that they intend to provide more health plan options as a result of implementing a defined contribution approach; however, nearly an equal percentage of employers are not clear on their plans at this point. Very few are looking to provide a greater choice in carriers. Some of the early adopters of defined contribution may join a private exchange; others may simply add choices to their existing employee experience.

The study found employers have incorporated employee self-service for some functions but not for the full range of transactions. For new hires at large companies, online enrollment without administrator involvement is gradually trending upward, at 29% in 2014, over the 28% reported in 2013. For life events, however, the numbers are on the decline (18% in 2014 vs.19% in 2013), as are the numbers for annual open enrollment for all benefits (37%, down from 39% last year). While large employers continue to make slow and steady progress adopting employee self-service, it is noteworthy that nearly 30% still do not offer online enrollment for new hires.

Wellness Program Findings

The 2014 bswift Benefits Study found 40% of smaller companies base the success of their wellness programs primarily on employee participation, with 27% of employers ranking health cost savings as the most important factor. This is in contrast to larger employers: 40% put cost savings first, while 37% give employee participation the top position.

Wellness program participation rates declined this year. Fewer employers were able to achieve participation rates in excess of 50%. In 2014, 60% of companies reported wellness program participation rates of 50% or less.

For large employers with wellness initiatives, health risk assessments (HRAs) and biometric testing top the list with 84% reporting that they offer these two. Next are smoking cessation, weight loss/weight management programs and physical fitness challenges and activities (each at 81%). Thirty-six percent of large employers that have wellness programs offer annual incentives greater than $500, up from 29% of large employers last year.

Larger incentive dollars drive greater employee participation, the study indicates. Only 6% of employers using incentives of $50 or less have participation rates greater than 50%. Annual incentive amounts greater than $500 are typically necessary to drive high participation rates. However, a distribution of engagement results still exists within each incentive tier, so incentive design and communication do significantly impact results. For example, 17% of employers offering annual incentives greater than $1,000 still have participation rates of less than 50%, so human resource leaders cannot rely on incentives alone to deliver the engagement rates they seek, bswift said.

Nearly one-quarter of all employers with wellness programs in place reported offering incentives for meeting or exceeding biometric thresholds, up from one in seven in earlier years. Premium incentives (used by 64% of employers with wellness offerings and incentives, level with 64% in 2013 and up from 58% in 2012) and cash, gift cards and sweepstakes (used by 56%, up from 48% in 2013 and 38% in 2012) are proving to be the most popular forms of incentives.

The study may be downloaded from here.