Wells Fargo Insurance conducted its second “Employee Benefits Trend Study” and found a majority expressing trepidation about the health care landscape ahead. The regional picture, owing to the built-in expenses associated with Westchester and Fairfield counties, offers an additional red flag for the 2020 so-called “Cadillac Tax,” which does not make allowances for regional variables.
The company”™s national practice leader for its employee benefits resource group, Mike Mascolo, said from his New Jersey office the data are part of a trend to lower employer costs and to shift health care responsibility to the employee.
“There are strong indicators that employers are struggling with the cost of benefits and are trying to shift those costs,” Mascolo said.
The study examined how middle-market companies and large corporations are responding to health care reform requirements, while at the same time they develop a workable ”” “competitive” was Wells Fargo”™s word ”” benefits strategy.
Study highlights included 58 percent of employers expecting their medical plan costs “to exceed the thresholds for the Affordable Care Act excise tax, or Cadillac tax, which was originally to take effect in 2018, but has been delayed until 2020;” 70 percent of employers expecting their budgets for benefit plans to increase, citing human capital and health and productivity as key issues; and half of the employers in the study saying they will continue to make changes to their plans either this year or in 2017.
The changes companies potentially foresee include:
- adding a high deductible plan option (52 percent);
- increasing the employee contribution percentage (56 percent); and
- increasing co-insurance features (55 percent).
The study also found that as more employers offer high-deductible health plans, companies are aware of the financial exposure their employees face with these types of plans. “As a result, they are looking to mitigate those costs by offering voluntary benefits solutions,” according to the study.
Wellness offerings, which encourage healthy behaviors, are on the docket for 51 percent of respondents. And 91 percent of respondents said improving the health of employees is important as it correlates with lower medical costs, reduced absenteeism and increased productivity.
Mascolo said the regional demographics ”” including high levels of educational achievement ”” offer at least partial relief from the scourge of metabolic disorders, including diabetes, around which many programs are based.
“Westchester and Fairfield are not as bad as other parts of the country, but it”™s still quite expensive.” Smoking rates, too, are lower regionally than for the entire U.S.
Said Mascolo, “There”™s a correlation between tobacco use and health costs and tobacco use is much lower here than the national average.
“As for healthier diets, they are often a function of higher education and income,” he said. “At some point this conversation drifts into opinion. But there is a correlation between a healthier lifestyle producing a healthier demographic. That said, we still have pretty high diabetes rates.”
“For the last couple of years compliance has been the big issue,” Mascolo said. “It”™s a complex business issue requiring focus and attention, with that focus being on compliance of reporting for the ACA. A lot of time and effort has been spent gearing up for the reporting.”
Mascolo said a typical company faces challenges from employees and from the IRS and with integrating sources and reporting. He termed those challenges “fluid.”
Aside from becoming compliant with the ACA and lowering costs, the study also found that executives are making changes to their plans because of an increased focus on attracting and retaining talent, with 62 percent saying it is a top concern, up from 45 percent last year.
Dan Gowen, who is also with the Wells Fargo employee benefits resource group, said, “If the economy continues to improve, the demand for talent will grow, and having a benefits program that fits the company”™s culture is crucial to securing key talent. As employers focus on attracting and retaining talent, they can partner with their insurance broker and employee benefits adviser to explore making changes that best support their business goals and strategies.”
