Employers Avoid Cost-Shifting, Focus on Reducing Employee Outlays: Study

Despite group health plan inflation increasing again in 2024, a new study has found that employers continue staying the course in not shifting costs to employees who may already be overstretched by inflation and medical bills.

Instead, 64% of employers say they are looking for ways to boost their health and well-being offerings to better meet employee needs, according to Mercer’s “Survey on Health & Benefit Strategies for 2024 Report.” That’s on top of the 25% who said they had already enhanced their slate of benefits in the last two years to better attract and retain staff and meet employees’ needs.

With health care costs expected to jump 7% this year from the 2023 level and insurance premiums reflecting that increase, many employers will be challenged to balance benefit options with cost-controlling measures, according to the report.

 “Employers are looking to enhance benefits, but they need to do it carefully. Not by adding bells and whistles, but by looking for opportunities to add value,” Mercer wrote in its report. “Sometimes that means filling gaps in current offerings with more inclusive benefits. It might mean revisiting time-off policies to give employees more flexibility.”

With significant cost-shifting off the table for most employers, employers will have to get creative to meet the challenge of offering benefits that workers want and need, and health care they can afford, while also managing cost growth.

Addressing employee costs

Some tactics employers are using to boost affordability for their staff include:

  • Offering at least one free employee-only coverage in at least one medical plan.
  • Making larger health savings account contributions to lower-paid employees.
  • Using salary-based contributions, with lower-wage staff paying less than those earning more.
  • Offering programs to help employees manage specific health conditions.
  • Taking action to address the cost of specialty prescription drugs.
  • Focusing on virtual care.
  • Steering members to quality care with a navigation or advocacy service (beyond the health plan’s standard service).
  • Limiting plan coverage to in-network care only (in at least one plan).

Other benefit enhancements

Employers are also looking at enhanced benefit options, such as:

Support for women’s health — According to Mercer, 46% of employers plan to offer benefits or resources to further support women’s reproductive health, up from 37% last year.

This includes:

  • Preconception planning.
  • Menopause benefits (the percentage of employers planning to offer menopause support has more than tripled since last year’s survey).
  • Lactation help resources.
  • Post-partum depression resources.

Childcare benefits and resources — Employers can help support caregivers for the long term with flexible hours and family leave and time-off policies. Some employers also provide subsidized childcare benefits.

Increasing employee flexibility — More employers are also offering paid time off for all kinds of families (like those with LGTBQ parents). Other options being offered include:

  • Hybrid work options (80% of employers offer or plan to offer these),
  • Paid time off to volunteer (49%),
  • Remote work options (47%), and
  • Four-day workweeks or consolidated schedules (22%).

The takeaways

With group health plan costs continuing to increase amid a highly competitive job market, employers need to take a balanced approach to their benefit offerings, while being mindful of the increasing out-of-pocket expenses their employees may face when accessing health care.

Your decisions in also offering enhanced benefits will obviously be based on your budget, but also on your employee population. Call us to discuss options.

Average Family Plan Cost Hits $20,000 for First Time; What Can You Do to Cut Costs?

A new study has found that the average annual premium for a group family health plan has exceeded $20,000 for the first time in 2019, up 5% from 2018.

The average premium for single coverage plans in 2019 is $7,188, up 4% from the year prior, according to the Kaiser Family Foundation’s annual report on employer coverage.

The costs of high-deductible health plans are only slightly less than the average. The average premiums for covered workers in HDHPs with an attached health savings account are $6,412 for single coverage and $18,980 for family coverage.

Increasingly, workers are picking up a larger portion of the health care and insurance tab. In 2019, they are paying $6,015 on average in premiums for family coverage, or about 29% of the total tab. Workers with individual coverage contribute 17.3% toward the total premium.

Additionally, the average deductible for single coverage is $1,655 in 2019, which is unchanged from the year prior, however, the deductible is often higher for workers in small firms ($2,271) compared to large businesses ($1,412).

The average annual deductible among covered workers with a deductible has increased 36% over the last five years and 100% over the last 10 years, according to the report.

Also, 66% of workers have coinsurance and 14% have a copayment for hospital admissions. The average coinsurance rate for a hospital admission is 20%, and the average copayment is $326 per hospital admission.

Another survey by the Kaiser Family Foundation and the Los Angeles Times found that 40% of group health plan enrollees had difficulty affording health insurance or health care, or had problems paying medical bills.

And close to 50% said that they or a family member had skipped or postponed getting health care or prescriptions in the past year due to costs.

Easing the burden

There are steps you can take to ease the burden on both your company and your employees.

Consider plans with telemedicine – More and more employers (69% of firms with 50 or more workers) are offering health plans that cover the provision of health care services through telemedicine. Telemedicine can greatly reduce the cost of care in terms of price for medical visits, as well as the time involved for the employee to travel to the doctor. Telemedicine can include video chat and remote monitoring.

Utilizing retail health clinics – More health plans will pay for services rendered by retail clinics, like those located in pharmacies, supermarkets and retail stores. These clinics are often staffed by nurse practitioners or physician assistants and treat minor illnesses and provide preventative services. They can greatly reduce the cost of care for these kinds of visits outside normal hospital systems.

Plans with narrow networks – If a health plan can contract with fewer doctors and specialists, there is often less outlay for care. At this point, the jury is still out on exactly how much can be saved, but there are also drawbacks such as:

  • Disruption of provider relationships
  • Employee backlash
  • Reduced access or convenience for employees
  • Lack of specialists.

Tiered or high-performance networks – These networks typically group providers in the network based on the cost, quality and/or efficiency of the care they deliver and use financial incentives to encourage enrollees to use providers on the preferred tier.