Healthcare cost increases are expected in the near future. However, many employers are pursuing measures to improve their employees' health. Recent research shows that employers are also taking steps to manage the rising costs of medical plans. The recent survey found that health care costs are expected to rise by almost six percent. When compared with the average costs recorded five years ago, current numbers reflect an increase of 40 percent for employees. For employers, the increase was almost 35 percent. Since they must cover a larger share of costs than active employees, workers who retire early face even more financial challenges. Retirees who are not yet eligible for Medicare may expect to pay more than $4,200 each year for single-only coverage. For family coverage, the amount jumps to $10,500.
Health Benefit Design Options
Expect to see significant changes in employers' health benefits during the next few years. About 40 percent of employers feel that employees should be accountable for their individual health. This is one of the top strategies, and it is constantly growing in popularity. The same percentage of employers plan to review their health coverage offerings. They also plan to make sure they are complying with the PPACA. There are many different choices employers face. With new strategies emerging, they are each more likely to find a specific strategy that works best for their unique workforce demographics and company objectives.
Do not expect to see workplaces discontinue coverage plans just yet. Less than five percent of employers are considering discontinuing coverage for active employees. However, 45 percent of employers are likely to extend coverage to a portion of the workforce and recommend state exchange options for others. However, it seems that changes are likely to continue beyond the next several years. About 25 percent of employers do not feel confident that they will be offering health insurance in 10 years. By that time, they expect that state exchanges will greatly impact health plans. They will also impact retiree offerings.
Employer contributions to retiree medical plans will continue to deteriorate in the future. Most employers will introduce account-based alternatives, which are similar to 401(k)s. These plans will allow employees to put away money for their medical costs after retirement. Currently, 10 percent of employers have retiree medical programs. However, that number is expected to dwindle to less than five percent in the next few years.
Encouraging Employee Accountability
By encouraging employees to be accountable, employers greatly reduce the cost of health benefits. They also notice their employees are more productive. In addition to encouraging accountability for individual health, employers are encouraging accountability for the amount of services employees consume. Companies that do this have seen a small increase of about two percent in costs over the last four years. Expect to see more encouragement toward evidence-based care, decision-making support tools and specialty treatments in the near future. Employers are quickly discovering the advantages of teaching employees to be conscientious about their own health decisions. Financial rewards are also used to encourage healthy lifestyles.
Growing Benefit Trends
Employers are still struggling with the shaky economy. The cost of inflation only makes their problems worse. However, there are several tactics emerging, which they plan to use for cost control. These tactics include the following:
- Changes in pharmacy plans.
- Spousal and dependent coverage surcharges.
- Vendor management and more transparency.
- Growth in account-based health plans.
The future is certainly full of change. Some changes may bring better benefits for employees and employers. However, the changes are designed for individuals to build a better knowledge of personal health. To learn what options are available and what to expect, discuss concerns with an agent.