In 2015, enrollment in consumer-directed health plans (CDHPs) reached a new milestone -- one-fourth of all covered employees. Mercer’s 2015 National Survey of Employer-Sponsored Health Plans found continued growth in both CDHP prevalence and enrollment rates. Growth has been fastest among large employers. More than half of employers with 500 or more employees now offer a CDHP (59%, up from 48%), and 28% of covered employees are enrolled.
CDHPs place additional responsibility on the consumer. Typically, while CDHP premiums are lower, the risk for out-of-pocket expense is higher. This year’s survey results suggest that employers and providers are catching up to the demand for support tools to guide employees in making the most out of their CDHPs. A growing number of large employers contracted with a specialty vendor to provide employees with transparency tools that deliver price and quality information about specific health care providers or services to employees (15%, up from 12% in 2014). An advantage of these tools is that they can help consumers find an appropriate provider and obtain an estimate of the cost of a visit before the visit.
In addition, telehealth services, which can help employees manage out of pocket spending by providing a cheaper alternative to seeing a physician in person for certain non-acute services, are now offered by 30% of large employers, up from 18% in 2014 and 11% in 2013.
Employers are also taking steps to educate their employees about consumerism in general. Over half (55%) of large employers that offer HSA plans say they have made extensive efforts to provide communications related to this topic, including decision-support tools and provider cost and quality.
While health care consumerism has always made intuitive sense, in the early days it may have been an idea ahead of its time. But now, the tools and resources that make true consumerism possible are finally available, and all trends point to additional and more sophisticated resources on the horizon. Offering a complete “consumerism package” to employees takes more effort than simply implementing a high-deductible health plan. But providing appropriate support tools and education may be necessary to ensure that a consumerism strategy leads to a paradigm shift, and not just a cost shift.
The new Mercer Survey on Absence and Disability Management found that employers continue to embrace workplace flexibility, in part demonstrated by a migration from traditional vacation/sick plans to paid time off (PTO plans). PTO plans are now in place in 63% of the organizations surveyed, up from 50% in 2013 and 38% in 2010. PTO plans provide employees more flexibility and reduce the need to determine (and track) what type of day off is being taken.
But despite their focus on time off, many employees do not use all of the days available to them: 44% of participants report that their employees take less than 80% of their allotted PTO time. And for the growing number of employees who work remotely, time off may not truly be time away from work. Employers are rethinking time-off program design to take into account all of these dynamics and help employees to achieve a healthier work/life balance.
Some employers -- more than one in 10 respondents -- have taken the step of offering unlimited vacation, at least to executives. However, most employers that have implemented unlimited vacation have found that employees take about the same time off as they were allotted previously under a standard plan.
But other types of paid leave -- particularly parental leave -- are increasingly important as well. Generous parental leave policies implemented by a number of companies, particularly in the tech industry, were covered widely in the press and drew national attention. While for most employers, disability benefits are still the only official company-sponsored paid leave for new moms that are provided, 24% of respondents provide paid parental leave for bonding to the birth parent.
In addition, 25% of employers reported providing a paid parental leave benefit to the non-birth parent. Whereas parental leave for the birth parent begins when the disability ends, parental leave for the non-birth parent usually begins upon the birth of the child. For those providing a paid parental leave benefit, the median number of weeks offered is six weeks for the birth parent and four weeks for the non-birth parent. In the vast majority of cases, the paid parental leave benefit covers 100% of the employee’s pay.
Additional findings from the survey include:
- Employers grapple with increasingly complex federal and state leave requirements
- More employers are choosing to outsource FMLA administration. In 2015, 40% of respondents outsource or co-source FMLA, up from 38% in 2013.
- Improving FML administration and reducing the impact of absence on operations are respondents’ top priorities for their absence and disability programs (cited by 44% and 42%, respectively).
- Nearly two-thirds of respondents (65%) have experienced an increase in leave requests over the past two to three years, and about a third reported an increase in the number of ADAAA leave accommodation requests (32%).
- Clinical management and formal return-to-work (RTW) programs for non-occupational disabilities remain a largely underutilized strategy for managing disabilities.
- Only about a third of participants formally communicate objectives and expectations regarding occupational or non-occupational absences or disabilities to managers and supervisors -- and of those, about half formally communicate objectives for occupational injuries/illnesses only.
- The Americans with Disabilities Act Amendments Act (ADAAA) has caused employers to revisit their treatment of disabled employees. Employers are now more likely to end employment after determining that return to work is not feasible and conducting the required discussion about accommodations. Historically, employers waited for Medicare eligibility to terminate medical coverage for disabled employees.
- Nearly half of respondents have revised (or are considering revising) their policies on terminating disabled employees as a result of ADAAA.
Mercer recently published a report on our 2015 Survey on Absence and Disability Management, a survey of over 450 US employers. The complete survey report, which includes data tables with results broken out by employer size, region and industry, is available for purchase here. We also will post survey highlights periodically on select topics here.
Here’s an employee advocating for her own health: Before a medical appointment, she checks her health insurance to make sure the visit is covered. During the visit, she takes notes. Before the doctor writes the prescription, she asks, “Are there any generics?”
If more people had taken just that last step to use generic medications, consumers and employers could have possibly saved $25 billion -- yes, that’s billion with a B -- in out-of-pocket expenses between 2010 and 2012, the Journal of Internal Medicine reported in June 2016.
Persuading employees to be their own health advocates is a win-win-win for the employees’ health, their productivity, and the employer’s health care costs. Here are three steps to turn your employees into advocates for their own health:
- Tell employees they’re protecting themselves.
The physician may take the lead in providing medical services, but healthcare is ultimately a team sport. Because of the high potential for medical errors, patients are best positioned to play offense by asking a lot of questions and clarifying communications by all parties involved.
Medical errors may lead to serious or fatal events in 80,000 to 160,000 people per year, according to an April 2013 review of 25 years of medical malpractice claims by researchers at Johns Hopkins University. The most common errors are missed, incorrect, or delayed diagnoses.
The study underscores the importance of patients speaking up. Furthermore, seeking a second opinion results in revised diagnoses in 39% of cases, according to Advance Medical, a firm that helps patients obtain expert medical opinions.
- Point your employees to technology.
The palette of digital tools to empower employees to be their own health advocates is growing. Here are two:
About 30% of employers are encouraging the use of mobile health apps to help employees become more proactive about their health, according to Mercer’s 2015 National Survey of Employer Sponsored Health Plans. For those with chronic conditions, some apps could save up to $3,000 per patient each year, reported Health IT Outcomes in September 2014.
These tools pull back the curtain on healthcare pricing by comparing the price of specific procedures across providers in a given market. Given the wide range of prices charged for even common diagnostic services like xrays and MRIs, finding a lower-cost provider can save employees substantial out-of-pocket cost.
- Offer a “script.”
Many patients are murky about what to ask their doctors. However, questions like “What are all of my options?” can trigger alternatives that save money and have better outcomes.
The Agency for Healthcare Research and Quality lists 10 questions that can spark discussions between employees and their physicians. Consumer Reports even offers videos and brochures to help patients speak up about unnecessary tests and treatments.
Resources like these can teach your employees that self-advocacy is not only encouraged, but it’s also the key to value in healthcare -- managing cost while getting the best care.
Your new employee is 26 years old. He’s rarely sick -- maybe some occasional weekend-warrior soreness. His biggest health expense is his refrigerator full of grape Mountain Dew Kickstarts.
Then, there’s your vice president. She’s 55 and takes insulin for diabetes, just quit smoking, and has a husband and kids who rely on her insurance. She’s working hard to improve her health.
Obviously, these two have different health insurance needs. But many small and mid-sized employers would be challenged to offer more than one medical plan. In fact, about half of employers with 50 to 499 employees only offer one plan. How can they offer health benefits tailored to employees like these two, plus everyone in between?
A Market-based Solution
Private health exchanges are one approach that a small, but growing, number of companies are using. These exchanges cover some 6 million Americans and offer an array of plans, from traditional broad-network PPOs to high-performance narrow networks, and from plans with first-dollar coverage to HSA-eligible high-deductible plans.
They’re designed to address today's most challenging aspects of benefits delivery, including:
High Health Benefits Costs
Exchanges usually include employees from multiple companies, so they can leverage their volume to lower health premiums for employees, as well as plan costs for companies. Employees are also given more plans to choose from. They have the option to select higher-deductible health plans that lower their premiums, while lowering costs for employers as well. Converting to a private health exchange has saved companies up to 15% on their medical costs in the first year.
A Potpourri of Employees (the multigenerational workforce)
In the digital age, even small employers can hire staff from coast to coast. Millennials Skype with baby boomers. Generation Xers instant-message with seniors.
And everyone’s bringing different health needs to the table. Despite this, nine out of 10 employees say benefits are just as important as salary, and 63% say benefits are a major factor in choosing where to work.
Exchanges can offer a wide range of options to suit everyone, such as:
- Traditional health plans with HMOs and PPOs
- Narrow networks
- Provider-owned plans
- Plans for self-insured employers
- High-deductible health plans
Today, 80% of employees say a choice of health plans is critical to their job satisfaction. Employees are becoming smarter healthcare consumers. They want to shop around for healthcare and health benefits like they would anything else.
Sometimes, giving employees options is the best choice. For employers turning to private health exchanges, that means offering a variety of plans plus benefits counselors who can advise employees of all their options. The employees can select the best solution for themselves and their families. And that’s a solution everyone can live with.
Open enrollment season is just around the corner, and HR professionals at companies of all sizes should be preparing to share benefit details with their employees as part of their 2017 enrollment process. Questions and some confusion are inevitable, but there are ways to make sure open enrollment goes smoothly:
- Put together a cohesive package
Work with your provider or vendor partner to create a package detailing the benefits available to eligible employees, so they have just one place to look for all the information they need. It should include summary sheets, pricing, how to use the benefits, and enrollment instructions and deadlines.
- Be clear
Communication is essential to engage employees and ensure they understand the benefits and their options. Even if plans have not changed from the previous year, new employees will be accessing benefits for the first time and other employees’ family situations may have changed. Avoid the temptation to provide communication that is too technical and granular. Provide short, bite-sized pieces of information and offer ways to find more detail if an employee needs it.
- Test systems
Make sure your online enrollment system works. Testing it ahead of time prevents problems later. It’s better to get input on whether the system is easy to use and navigate before open enrollment than during it.
- Set up meetings and align resources
Regardless of all of the preparation and communication, employees are going to have questions. Set up times with your provider or vendor partner for employees to ask questions about the coverage and learn what options may work best for them. Provide your partners with resources and guidance they need to help you get your messages across in a clear and consistent manner.
- Highlight the value
Since benefits packages are part of employees’ total compensation, it is important that they understand the value they get from it. The open enrollment process is a good opportunity to convey the organization's total benefit value -- especially the hidden dollars being contributed towards benefits like life insurance and retirement plans.
Follow those five steps and you’re likely to have a solid open enrollment. To take it to the next level, consider these:
Go mobile: Introduce mobile or add more mobile options into your enrollment communications. These can be simple text messages to communicate enrollment dates or more involved interactive, mobile-friendly videos to educate employees.
Be concise: Provide clear, simple descriptions along with links to get more detailed information. Charts and infographics are a visually appealing way to convey information without making it appear overwhelming. Provide FAQs and have other resources available to respond to employees’ questions.
Be compliant, but not boring: The Affordable Care Act (ACA) is complicated and there are compliant-based communications like Medicare Part D enrollment information that must be distributed in a timely fashion. While these are important to share, they can be overwhelming so be sure they are not the focus of your communications.
As we’ve reported, consumer-directed health plans have mushroomed during the health reform era. In 2015, exactly half of all large employers (those with 500 or more employees) offered a CDHP eligible for a health savings account -- yet only 5% offered it as the sole plan available to employees at their largest worksite. Still, many employers are at least thinking about a full-replacement strategy.
In designing a full-replacement plan, how do employers take into account the fact that the plan must now work for all employees, rather than the minority who typically select it? And how is cost affected? To find out, we analyzed data from Mercer’s National Survey of Employer-Sponsored Health Plans to compare HSA-eligible CDHPs offered as a full-replacement strategy to those offered alongside PPOs or HMOs. Here’s what we learned:
Employee demographics: Employees enrolled in a full-replacement plan are older, on average, than those enrolled in HSA plans offered as an option (44 years versus 41 years), and they are also more likely to elect dependent coverage (58% versus 53%).
Plan design: Plan design is generally richer among the full-replacement plans. Employers are more likely to make a contribution to a health savings account (80%, compared to 71% of those offering the plan as an option), and the median contribution amount is higher ($700 compared to $500 for employee-only coverage, and $1,400 compared to $1,000 for family coverage). While the median in-network deductibles are actually higher in the full-replacement plans (by $200 for employee-only coverage and $400 for family coverage), out-of-pocket limits are significantly lower (by $800 for employee-only coverage and $1,600 for family coverage), to protect employees that incur significant medical expenses.
Employee contribution requirements: Employee contributions are somewhat lower as well. Among the full-replacement plans, employees contribute 18% of premium, on average, for employee-only coverage and 23% for family coverage, compared to 20% and 27% among plans offered as an option.
And what about cost savings? With younger (and presumably healthier) employees in the optional HSA plans and richer plan design in the full-replacement plans, it’s not surprising that the average per-employee cost of coverage in the full-replacement plans is higher than in the plans offered as a choice -- $9,835 compared to $9,032. Clearly, the opportunity for tax-advantaged savings can make an HSA-eligible plan more attractive to many employees than a traditional PPO with similar cost-sharing levels. And plans that incorporate effective transparency tools and other consumerism resources may deliver higher-than-average savings. However, this analysis suggests that most HSA sponsors are not willing to offer as lean a plan when it’s the only type of plan rather than a choice among traditional options -- and that will necessarily be a limiting factor when it comes to cost savings.
And as organizations go through the significant change management process of moving away from traditional medical plans to all HSA-based ones, they may well be finding that reinvesting some of the savings back into making the program more worker-friendly could be just the sweetener they need to support attraction, retention and a happier work-force.
An important caveat: Because so few large employers currently offer an HSA plan as a full replacement, these results should be considered suggestive rather than representative.
It’s a done deal! Federal spending legislation cleared by Congress today for the President’s expected signature contains a two-year delay of the excise tax on high-cost plans. Assuming the tax does go into effect in 2020, the cost threshold will be the same indexed amounts they would have been without the delay. However, the U.S. Comptroller General will conduct a study on appropriate age and gender adjustments in consultation with NAIC.
So what does the delay mean for employers? The 2020 effective date provides “breathing room” for employers to thoughtfully plan for avoiding excise tax exposure. It’s true that there is broad support for repeal of the excise tax in Congress and many think this delay gets us one step closer to repeal. But it’s also true that if the provision is not repealed, employers that don’t prepare for it will face with tough decisions about cutting benefits to bring cost below the tax threshold.
Our research shows that more than a third of all employers currently offer a plan that is on track to trigger the tax in 2020. That’s an indication that -- with or without the excise tax -- employers still need to manage health care costs, improve quality, and engage employees to be better consumers and more accountable for their own health.
So take this extra time to consider leveraging a wide range of proven strategies, including consumer-directed health plans, total health management, and health innovations. Mercer’s latest survey found that about a fourth of employers are considering moving to a private exchange within five years. Our own exchange, Mercer Marketplace, has helped clients to not only reduce their costs but also to engage their employees in making better health care decisions with insightful education, broader health improvement solutions, and better decision-support tools.
And, just as a quick reminder, the ACA reporting deadline is fast approaching. But don’t let that stop you from celebrating this piece of good news. I know I am!
This has been a busy week for healthcare in DC -- and the week’s not over yet! On the heels of the leaked Republican reconciliation bill language last Friday (that is already being described as out of date), the governors arrived over the weekend for a National Governors Association meeting that included dinner at the White House on Sunday. While the President tweeted that they “might” talk about healthcare, you can be sure the future of the Medicaid program and, more specifically, Medicaid funding, was at the top of the governors’ list of topics. Certainly, the 31 states that expanded Medicaid fear the funding implications of a block-grant program.
On Monday, the White House hosted a meeting with executives from the insurance companies to discuss government action required to "save" the failing individual market and convince (or perhaps, strong-arm) the carriers to stay in the game. Earlier this month, HHS announced revisions to the deadlines to file individual products to be offered in 2018 on the public exchange. This allows more time for legislative and regulatory action that might influence carrier decisions.
On Tuesday, the POTUS addressed the full Congress for the first time. He took a few minutes to lay out his five requirements for a replacement strategy. I’ll give you the short version below, but I recommend you also check out this Vox article, in which Sarah Kliff decodes the actual wording of each:
- Ensure Americans with preexisting conditions have access to coverage
- Help Americans purchase coverage through the use of tax credits and expanded health savings accounts
- Give states the resources and flexibility they need with Medicaid to make sure no one is left out
- Implement legal reforms to protect patients and doctors from unnecessary costs (presumably malpractice lawsuits) -- and bring down drug prices
- Allow the sale of health insurance across state lines
Meanwhile, it is widely reported that the Republican version of the reconciliation bill is changing constantly as various contributors attempt to balance the requirements of a very divided party -- all the while knowing that the Senate is working on its own replacement plan. We understand members of the House are reviewing the new bill and it is scheduled to go to committee for mark up next week.
Like I said, it’s been a busy week -- and there is no sign of the pace slowing anytime soon.
With the election behind us, the news is full of speculation about what will happen next. We hosted a webcast for employers two days after the election and had a record turnout, taking the opportunity to conduct a quick opinion poll about repealing and replacing the ACA and other possible legislative actions by the new president and the 115th Congress.
Employers have strongly supported repealing the excise tax and the employer mandate since they were first enacted. In our poll last week, 63% of the more than 650 employers participating said they favored repeal-and-replace of the ACA; only 15% said they oppose; and 22% said they don't have an opinion yet. Admittedly, we don't have any real details on what repeal looks like, so this response can be interpreted as interest in something different from what is currently in place.
We also asked respondents how much of a priority they would like to see the new administration place on some issues of concern to employers. Here are the top three:
- Prescription drug cost and price transparency was considered the highest priority of the issues, with a rating of 4.3 (using a scale of 1-5). As we mentioned in an earlier post, a Kaiser Family Foundation survey found that prescription drug costs were the Number One health care issue for voters, ahead of Obamacare. Rising drug costs are currently one of the biggest drivers of employer health plan cost. With 40 new high-cost specialty drugs projected to hit the market each year for the next five years, it is easy to see why this tops the list.
- HSA expansion was the second priority, with a rating of 3.6. Implementation of high-deductible health plans has accelerated in recent years, and enrollment reached 29% of all covered employees in 2016. Employers support changes that would make these plans more attractive to employees, such as higher annual contribution limits and allowing funds to be used for OTC drugs and telemedicine visits.
- A national uniform paid leave framework was the third priority (3.3). With 42 different paid leave laws now on the books (in seven states and 34 municipalities), employers with operations spanning many locations face huge compliance and administrative challenges and many would welcome relief.
While this list is by no means everything being discussed in Washington related to health and group benefits, it is representative of some of the top issues for employers. With change in the air, you have an opportunity to influence the debate. Now is an especially important time for employers to make their voices heard in the policy debate, either independently or as part of several organizations such as the American Benefits Council, the ERISA Industry Committee, the National Business Group on Health, and the US Chamber of Commerce, to name just a few. Your congressional representatives and the incoming Trump administration need and want to hear from you!
Annual cost-sharing limits for nongrandfathered group health plans would increase to $7,350 for individuals and $14,700 for families in 2018, under a recent CMS proposal. This marks a 2.8% increase from the 2017 limits, which cap out-of-pocket costs for in-network covered essential health benefits under nongrandfathered group health plans at $7,150 for self-only coverage and $14,300 for broader coverage.
Applying the same premium adjustment percentage to employer shared-responsibility assessments, the play-or-pay assessment for not offering coverage would increase to $2,320, while the assessment for offering coverage that is unaffordable or lacks minimum value would increase to $3,480 for 2018.
The Department of Health and Human Services' Office for Civil Rights (OCR) has launched an initiative to more widely investigate HIPAA breaches affecting fewer than 500 individuals. Historically, investigations have focused on breaches involving protected health information (PHI) of 500 or more individuals, but OCR now intends to shift more attention to the root causes of smaller breaches. OCR believes breach investigations allow it to better understand industry-wide compliance problems as well as compel corrections for entity-specific deficiencies.
Employers are grappling with the escalating cost of healthcare benefits. HR and finance leaders are adapting -- as are employees across the nation -- to a ‘new normal’ of narrow networks and high deductible plans. Basic coverage is increasingly augmented by voluntary benefits to meet the varied needs of employees and their families. During this ongoing transition, employees are being asked to more actively participate in the enrollment process.
This new employee empowerment shifts more responsibility of choice to the employee, who is trying to make vital health care decisions, but who, surveys confirm, feels ill equipped, alone, and confused about what the best decisions may be. So what is the way forward?
First, some surprising numbers: According to a 2015 survey by the Kaiser Foundation, nearly two-thirds of American adults say it’s difficult to find out what medical care will cost. Despite that, a mere 3% actually shopped for price among doctors and just 2% for hospitals. In fact, 57% of insured Americans are unaware that physicians charge different prices for the same care, according to Public Agenda.org.
The picture improves when we look at individuals who have easy access to information. A recent study published in the Journal of the American Medical Association (JAMA; June, 2016) found that use of a price transparency tool reached 10% of the 149,000 employees who were offered one.
Interestingly, a majority of Americans do not equate price with the quality of care. The Public Agenda results showed 71% of insured Americans say higher prices don’t necessarily deliver better quality care, while 63% conclude that lower prices are not an indicator of lower quality care. “Many may be ready to choose less expensive care. Together, these findings suggest that Americans are open to looking for better-value care,” summarized the non-profit, public issues think tank.
That’s good news as the focus for employers continues to shift toward providing employees with the tools they need to make informed decisions about their healthcare. So here are two questions to ask as organizations gear up for 2017 and beyond: Do your employees have access to good information about the cost and quality of healthcare services in their markets? And is your health and benefits platform an inviting place for them to go to find this and other future-ready benefits solutions?
Confronting issues around healthcare costs is a significant challenge facing today’s small- and medium-sized businesses. While you might think your size limits your options, that’s not necessarily the case.
In fact, whether or not any particular small- or medium-sized company can actually reduce its health insurance premiums while maintaining the same level of coverage depends on each entity's specific situation. But there are some general techniques that will apply to all. Here are four actionable approaches to controlling healthcare costs:
- Negotiate better
This may seem obvious. The proposal you receive for next year is not necessarily the carrier’s best and final offer. Sit down with your broker to develop a renewal, marketing and negotiation strategy. A well-planned approach will help you get the lowest possible cost and leverage everything that today’s competitive marketplace has to offer.
- Investigate turn-key health and benefits solutions
Don’t assume you have to manage everything within your company. Investigate offerings that provide a “turn-key solution” that includes more personalized health and benefits support. A benefits solution like Mercer Marketplace 365+ would take the stress out of healthcare for your employees, making them happier and healthier in more ways than one.
- Switch to individual plans
Although it’s not a common strategy, some businesses have considered an individual plan approach that eliminates the employer contribution and positions employees who qualify to take advantage of subsidies that could provide them with coverage at around $100 a month. Options for individuals exist on the public exchange as well as in the private market. Be sure to consider potential penalties under the ACA and any impact this approach may have on other important business objectives, such as the ability to attract and retain employees.
- Promote a “Culture of Health” within the office
Reward employees for taking care of themselves and living a healthy lifestyle by giving them tools to track fitness goals and introducing lifestyle initiatives. These incentives will also motivate employees to take advantage of the benefits they have, such as their annual check-up. Studies show that leaders who live and promote healthy lifestyles are successful at getting employees to do the same.
The key to controlling company healthcare costs lies in having a plan -- and putting it to work.