Employer Health Care Costs Will Increase Significantly in the Near Future

June 04, 2014

A recent survey showed that about 80 percent of employers have expressed their intentions to continue offering health benefits to employees in the near future. Although the projected cost increase of the new health care reform bill shows a significant increase from years past, employers are still seeing the benefits of keeping or reducing coverage instead of dropping it completely.

The biggest changes of the new bill will not go into effect until 2014. However, it is important for employers everywhere to have a strategy and get ready for the changes before they happen. Changes brought about by the new PPACA regulations will have a major effect on how health services are delivered and how people obtain medical coverage. One of the most affected groups will be retirees.

Health care cost increase rates have slowed, but almost 60 percent of employers know they will be targeted by the 2018 health care reform excise tax if changes are not made to current benefits. In order to avoid the tax, more than 80 percent of employers plan to make changes and control costs.

About 60 percent of companies plan to change their programs or actions, and almost 40 percent plan to reduce subsidization for dependents and spouses of covered workers. Nearly 30 percent plan to implement spousal surcharges or waivers. Some employers will also place more costs on the shoulders of their employees. Almost 15 percent plan to increase employee premiums in the near future by at least five percentage points. However, slightly more than 40 percent plan to increase employee premiums by less than five percentage points.

Although the majority of employers understand and appreciate the value of affordable health care, they must take steps to control costs and increase workers' accountability to live healthier. More than 75 percent of employers feel that health benefits are the key to employee value propositions over the next several years. Although more than 30 percent of employers plan to evaluate their plans immediately, about 40 percent plan to have this done in the next few years.

Another detail this survey found was that a strong growth of account-based health plans is expected. These plans, which are commonly abbreviated as ABHPs, will likely be offered by 80 percent of employers soon. Enrollment in these plans continues to rise significantly. In 2006, the enrollment numbers were only in the single-digit range. However, that number is expected to grow beyond 30 percent in the next several years. The survey also found that more than 25 percent of employers plan to add telemedicine to their plans in the next several years, which shows that health care delivery is also evolving. To learn more about how the PPACA works or what steps to take next, discuss these issues with an agent.