Big Changes In Store For Corporate Health Benefits

By Cyril Tuohy

InsuranceNewsNet

Big changes are in store for corporate health benefits delivery models, beginning in 2016, as companies start looking to private health exchanges in search of more flexibility and cheaper health insurance for their employees. These findings were revealed in a survey released by the consulting firm Towers Watson.

The excise tax, scheduled to go into effect in 2018, is another reason that 2016 is shaping up as a key date for the delivery of company-sponsored health benefits.

“The health care landscape is changing rapidly thanks to health reform, continued cost escalation, the emergence of health benefit exchanges, and new provider contracting and care delivery arrangements,” Randall Abbott, a senior health care consultant at Towers Watson, said in a statement.

Nearly three quarters (74 percent) of companies surveyed said they will be looking closely at private exchanges as a delivery channel for health benefits, according to the 2013 Health Care Changes Ahead Survey of 420 midsize and large companies.

For the next two years, however, nearly all companies – 98 percent – will retain their medical plans negotiated directly with insurers.

The survey also revealed that companies are far more confident about private health exchanges than they are about public exchanges. Nearly 30 percent of employers say they have confidence in public health insurance exchanges compared with 58 percent who say they find private exchanges more appealing, a margin of nearly 2-to-1.

Barring adjustments to their health plans, more than 60 percent of employers believe they will be affected by the excise tax. In 2018, a 40 percent excise tax will be imposed on health plans whose value surpasses the $10,200 threshold for individual coverage, and the $27,500 threshold for family coverage. 

“Employers are balancing many competing factors as they revisit their financial commitment to health benefits and their ability to maintain a sustainable plan in the face of annual cost increases and the excise tax,” said Ron Fontanetta, a senior health care consultant at Towers Watson.

The percentage of employers who said they are “somewhat likely” or “very likely” to drop their health benefit plan for part-time workers is expected to triple from 10 percent in 2014 to 38 percent in 2015 as part-timers rely on public exchanges, the survey found.

The percentage of companies who said they are “somewhat likely” or “very likely” to discontinue their employer-sponsored medical plans for retirees 65 years old or older will nearly double, from 25 percent in 2013 to 44 percent in 2015, the survey also found.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at Cyril.Tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.