Employers are mainly taking a "wait and see" approach before making major changes to how they offer employee benefits, and most say they still feel it is important to continue to offer benefits to their workers even if distribution and delivery methods change, a recent survey reveals.
The Willis Group survey questioned over 1,000 employers, 62% of which employ 499 or fewer workers. In a summary of findings, Willis says nearly 75% report an increase in their health-plan costs from 2013 to 2014.
However, employers generally do not plan to respond by eliminating benefits. Willis says in a summary of the survey's findings, "Despite some highly visible reports in the media, employers generally do not plan to eliminate group medical benefits as a part of their compensation practices." Willis says over 60% rated "Moving away from benefit engagement" as "extremely unlikely," and another 17% rated it "somewhat unlikely."
Willis says, "Employers view their medical benefits as an important and desirable part of their compensation offerings and they will take steps to manage costs so that they can continue to offer benefits to their employees."
Steps include cost-shifting, but not exclusively and not in all cases. Willis says 22% of respondents kept employee contributions the same this year. "Strategies other than cost shifting…include increasing new-hire waiting periods, reducing benefits to minimum-essential coverage and managing seasonal and variable-hour employees to reduce the number of potentially benefit-eligible employees, says Willis.
Private exchanges are another option employers are exploring, with 20% stating they are considering this path and 8% reporting they have strategies in development. "The majority of respondents also indicated that they are likely to promote employee choice, engagement and consumerism as part of their benefits strategy," says Willis.
Just 10% of employers are considering the complete elimination of spousal coverage, recognizing the "potential employee-relations ramifications" of doing so, says Willis.
"Overall," Willis states, "employers are taking steps to adjust contributions and eligibility within the parameters set by the Patient Protection and Affordable Care Act (PPACA) regulations, though they are doing so with a key objective in mind: continuing to offer benefits to their employees"
Interestingly, while the cost of PPACA is a top concern for employers, nearly two-thirds say they have not identified the costs to their businesses. Forty-four percent say they have not specifically identified the cost of the Cadillac tax. Willis says, "While this seems counterintuitive considering the significance and attention applied to the costs of healthcare reform, it demonstrates that employers' focus has, in many cases, been drawn to the immediate compliance needs and administrative difficulties.
"Despite the fact that industry consultants have identified the concern over the impact of the Cadillac tax to their clients, lack of employer engagement on this topic might be because employers view the ongoing cost analysis as a 'luxury' as compared to the day-to-day administrative requirements demanded of them more immediately."
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