U.S. Companies Asking Employees to Cover More Health Care Costs in 2012

Aug. 19, 2011
53% of large companies plan to increase the percentage that employees contribute to health care premiums

p>As employers anticipate a 7.2% increase in health care costs in 2012, they are seeking ways to minimize their costs. One way is to have employees pick up a larger share of the costs, according to a survey released by the National Business Group on Health on August 18.

More than half of respondents (53%) plan to increase the percentage that employees contribute to the premiums, while 39% plan to increase in-network deductibles. Additionally, about one in four employers plans to increase out-of-network deductibles (23%) and out-of-pocket maximums (22%) next year.

"Employers are facing a multitude of challenges posed by rising health care costs, the weak economy and the financial and administrative impact of complying with the new health reform law," said Helen Darling, CEO of the National Business Group on Health. "As a result, employers are being much more aggressive in their use of cost-sharing techniques and cost control programs, and are making certain that employees have more reasons to be cost-sensitive health care consumers."

Last year 61% of the companies had a consumer-directed health plan (CDHP). This year that number will be 73%. In addition, about two in ten employers (17%) will have or move to a total replacement consumer-directed health plan in 2012. The most common type of CDHP plan is a high-deductible health plan with a health savings account (75%).

The survey also found that more than half (57%) provide employees' spouses and domestic partners access to telephonic or online weight management coaches while 54% provide access to online weight management tools. Approximately one-third of employees also make these programs available to employees' children.

The move toward involving employees in wellness and preventative programs as a way to decrease costs has been gaining in the past few years. One example is the WIKA Instrument Corp. which was able to achieve 99% employee participation rate.

In fact last year the Business Group on Health reported that employers are using a variety of incentives to encourage employees to participate in wellness program. More employers (62%) offered incentives in 2010 than in 2009 (57%). These included offering cash and gift cards and making additional contributions to health savings accounts. The incentives provided by employers averaged a total of $430 per employee in 2010, which was a 65% increase from $260 in 2009.

Other companies are making major investments in preventative health efforts as they are seeing good ROIs from these types of programs. Lincoln Industries recently completed a 20,000 square-foot facility, called HealthyU, that will provide medical care, disease management and health coaching. The company expects to break even on the building costs the first year and see a ROI the second year.

Looking ahead some companies will also be making changing based on regulations from the Patient Protection and Affordable Care Act as it continues to come into effect. The survey found the following:

  • Annual Benefit Limits: The majority of employers (59%) are not making any changes for 2012, (full restrictions on benefit limits will be banned in 2014). However, more than one-fourth (27%) are making changes to annual limits for preventive and wellness services. Another 14% are making changes to annual limits for mental health and substance abuse services.
  • Grandfather Status: Nearly one fourth (23%) will have at least one benefit option that keeps its grandfather status in 2012 while 19% will drop its grandfather status. About one half (49%) did not have any benefit option in grandfather status this year.
  • Default Plan for New Hires: More than one fourth (27%) plan to use their least costly health plan for employees as their default plan for new full-time hires as required. Slightly fewer (19%) plan to use the least costly plan for employers as the default plan.

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