Few Employers Will Use Health Exchanges

December 17, 2013 (PLANSPONSOR.com) - In the wake of health care reform, employers anticipate further cost sharing in 2014.

However, despite industry research to the contrary (see “Private Exchanges Being Considered for Cost Savings”), the 2013/2014 Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey, sponsored in part by McGladrey LLP—provider of assurance, tax and consulting services focused on the middle market–finds only 5% of employers intend to pursue employee coverage through a private exchange, and only 4% plan to discontinue coverage entirely and provide a subsidy for employees to obtain coverage in a state or federal exchange.

Other actions companies plan to take to address health care costs include: raising employees’ portion of premium payments (35%); raising employees’ co-payments or co-insurance rates (23%); raising employees’ deductibles (22%); and implementing wellness programs (22%).

According to the survey, most employers have decided to continue offering group insurance to full-time employees for the next 12 months. “While some companies have announced their decision to discontinue employer-sponsored health coverage for part-time employees—directing them to the public health exchanges for coverage—more than eight in 10 survey respondents expect to continue coverage for full-time employees during the next plan year,” says Verisight Executive Vice President Martha Sadler.

For the third year, employers reported health/welfare benefits costs had the most significant impact on their total rewards (salary, bonus, health and welfare benefits, and retirement) decisions (59%) for 2013. This was followed by corporate performance (50%), retaining key employees (47%) and attracting key employees (42%).

Other findings from the survey include:

  • Ninety-five percent of firms surveyed have a defined contribution plan, such as an IRA or 401(k), and report that three in four (76%) employees made salary deferrals into their plan, while 77% of employers offered matching contributions, up from 68% and 74%, respectively.
  • For the third year in a row, plan sponsors consider the cost of investments (fees) as the most significant factor when evaluating retirement plan offerings. Cost of services and quality of service continue to rank in the top three.
  • Eighty-six percent of employers experienced an increase in health premiums in 2013, up from 79% in 2012. Half of the survey respondents said their premiums increased by 8%, up from one-third in 2012. 

Conducted online in August to October, the survey polled more than 1,000 organizations drawn from a national sample. The majority of respondents (65%) are companies with 51 to 1,000 full-time employees; however, firms of all sizes are represented. Respondents reflect a wide range of industry types including finance/banking, health care, manufacturing, distribution, construction, not-for-profit and professional services.

A survey report may be downloaded from here.