Smart Benefits: 5 Health Benefit Cost-Cutting Trends To Watch In 2014
Monday, September 09, 2013
1. Spouse Carve-Outs
UPS received national attention for eliminating health coverage for spouses of employees, and some local companies throughout Rhode Island and Massachusetts are following suit. The federal healthcare reform law requires that employers who provide insurance cover employees and their dependent children only. This means employers can potentially save 5-25%, depending on how many spouses they have been covering. Employers who want to take advantage of this carve-out can set policies stating that they won’t cover working spouses who are provided coverage through their own employer. And, starting in January, spouses who are not working may be eligible for coverage through the state exchanges.
2. Defined Contribution Models
Employers can fix their contribution to a set dollar limit, rather than defining the benefits covered for employees, potentially resulting in increased savings every year. Under this model, which is being offered to small employers who purchase through the Small Business Health Option Programs (SHOPs) of the exchanges in both Rhode Island and Massachusetts, employees can choose from a selection of plans based on their needs, and are responsible for any amount over the employer’s contribution limit. Large employers can also offered defined contribution plans, either directly or through private exchanges.
In the past, only larger employers typically self-insured. Now, all of the major carriers are rolling out new products with either full or partial self-insurance features for smaller employers, which can add up to big savings. That’s because self-insurance usually saves employers money on administrative costs and taxes, and it will enable them to avoid some of healthcare reform’s new fees. Employers also have much more control over plan design since the changes mandate by healthcare reform only apply to fully insured groups. And, with the right level of stop loss insurance, smaller employers can limit the claims they pay out directly.
4. More Plan Choice
Smaller companies typically offer one to two plans, mid-size organizations one, and larger companies two or more. Now, the public exchanges, through the small business SHOPs, will offer a choice of several plans for employees. This creates a new benchmark for employers to compare against when offering coverage, and they will likely to start provide more choice in plans. With healthcare reform requiring employers and exchanges to meet minimum plan values for plan designs, employers who want to continue to offer coverage and discourage employees from jumping off their plans are likely to create a minimum plan value plan choice to avoid the penalties coming in 2015.
5. Consumer-Driven Plans
Consumer-driven plans, particularly Health Savings Accounts, provide tax advantages and potential long-term savings for employers and consumers, as well as a viable opportunity to reduce premium expenses. As a result, employer adoption of consumer-driven plans has been steady since their inception more than ten years ago. Now, many employers who have offered CDHP plans as a choice are making these plans the sole option to reap more savings. In fact, the National Business Group on Health reports that 22% of employers plan to offer only these plans in 2014, up from 19% last year and up from 9% in 2009.
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