Trends in Employers’ Health Plans

According to the 2014 United Benefit Advisors Health Plan Survey, employers continue to shift a greater share of expenses to employees through out-of-pocket cost increases and reductions in family benefits. They are also delaying many effects of the Patient Protection and Affordable Care Act (PPACA) by utilizing an early renewal strategy.

United Benefit Advisors is an independent employee-benefits advisory organization with more than 200 offices throughout the United States, Canada and the United Kingdom. The survey is based on responses from 9,950 employers sponsoring 16,967 health plans nationwide.

Survey highlights

Among the most striking trends revealed by the survey is that employers have overwhelmingly opted for early renewals of their plans—a delay tactic that helped them manage costs and avoid costly PPACA-compliant plans. Another cost-management tactic employers are using is to increase out-of-pocket costs for employees.

Here are some findings from the survey:

• Health Plan Costs: The average annual health plan cost per employee for all plan types is $9,504, with an average employer cost of $6,276 per employee, and an average employee cost of $3,228.
• Delay Tactics: Premiums increased an average of 5.6% for all plans—up very slightly from last year’s 5.5% increase. However, there was a nearly 322% increase in the number of plans utilizing an early renewal strategy, which delayed many effects of PPACA.
• Out-of-Pocket Costs: While average in-network deductibles remained fairly level at $1,901, out-of-pocket maximums for 2014 increased more than 6% over last year. The median single out-of-pocket maximum is $3,500 (an increase of $500), and median family out-of-pocket maximum is $8,000 (an increase of $1,000).

“It’s worth noting that the average out-of-pocket costs and deductibles only tell part of the story,” says Les McPhearson, CEO of UBA. “Median figures show a significant increase because expenses at the lower end of the scale are dropping off. In other words, a ‘new normal’ is emerging in terms of higher out-of-pocket costs.”

The survey found that average out-of-network deductibles and out-of-pocket maximums increased more than those of in-network. “Out-of-network expenses are not subject to PPACA, which means they’ll likely continue to skyrocket,” says McPhearson.

Key findings from the UBA 2014 Executive Summary

• Employers overwhelmingly opted for early renewals of their plans.
• A "new normal" may be emerging for increased out-of-pocket costs for employees.
• There is increase in the number of HSAs and HRAs.
• Employers continue to offer one PPO health plan option.
• Wellness-program adoption seems to be in a holding pattern.
• Small and midsized employer costs flip-flop.
• Northeast regional plans continue to be the richest and could be subject to the Cadillac tax.

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By Ayo Mseka
Editor-In-Chief