Study finds employers value health plans as recruitment, retention tool

Employers seek to make it easier for their workers to obtain affordable health coverage, believing health benefits are a valuable recruitment and retention tool, according to an EBRI research report.

The study, “What Employers Say About the Future of Employer-Sponsored Health Insurance,” examined conditions that might lead employers to offload provisions of health benefits for employees.

Benefits executives who were interviewed for the survey said they found it difficult to imagine future circumstances that would lead their companies to stop providing health coverage to their employees.

Among the major findings of the report:

• Impact of the Affordable Care Act (ACA): Not as Predicted: The ACA presented an opportunity to challenge the status quo of employment-based benefits, with analysts predicting that employers would eventually redirect workers to ACA exchanges. Yet the link between employment and health benefits has not wavered since passage of the ACA:
• Individual Coverage Health Reimbursement Accounts: Not a Fit for Employers or Employees:  Individual coverage health reimbursement accounts (ICHRA) represent another opportunity for employers to change how they provide health benefits. Created by a rule enacted in 2019, ICHRAs let workers purchase health plans from ACA exchanges using pretax dollars from an account funded by their employer. This allows employers to limit their involvement in selecting health benefits for their employees.  Many interviewees indicated that they were not familiar with ICHRAs.
• Frustration over High Costs and Misaligned Incentives: Escalating costs may prove to be another challenge to employer-sponsored insurance. Nearly all the benefits executives interviewed were frustrated by ever-escalating costs, but they did not necessarily perceive the cost increases to be unsustainable.

“The ACA, private exchanges, ICHRA plans and the rising costs of providing health benefits were all threats that analysts and pundits alike had predicted would erode the relationship between employment and health benefits,” said  Paul Fronstin, director, Health Benefits Research, EBRI.

“Future policy and economic developments may pose yet another threat to the bond between employment and health benefits," he said, adding, "This includes the permanent extension of ACA subsidies, implementation of a public option and continued health care cost increases that outpace inflation.  Yet, the will for employers to provide health benefits to their workers remains strong.  It seems unlikely that these forces would cause companies to abandon employer-sponsored insurance.”

How the study was conducted

Interviews with 26 human resources executives were conducted for the study.  These executives held job titles, such as director of benefits or vice president of employee benefits, and had at least a moderate amount of decision-making power in building their firm’s benefits package.

The interviews were focused on efforts to interview benefits executives at large firms.  (The smallest firm represented in the study employed 300 workers, while the largest employed more than 250,000).

The executives worked in a wide range of industries. All but one firm’s largest health plan was self-insured and most offered at least two types of plans, such as a preferred provider organization and a high-deductible health plan.

“Most interviewees expressed a strong skepticism that their firms would drop health benefits or direct their workers toward marketplace exchanges. Broadly, companies continue to view their health benefits as a recruitment and retention tool and cutting these benefits would hamper their efforts to cultivate a strong workforce,” concluded Jake Spiegel, research associate, Health and Wealth Benefits Research, EBRI.

The study was supported by The Commonwealth Fund, a national, private foundation based in New York, NY. It supports independent research on health care issues and makes grants to improve health care practice and policy.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.