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Survey Finds High Commitment Level to Employer-Provided Health Care Benefits

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Nearly 9 in 10 employers are committed to offering health care benefits to their employees, according to a new survey.

Professional services firm Towers Watson, New York (NYSE, NASDAQ: TW), disclosed this finding in a summary of results from a survey of 440 midsize to large companies.

The survey reveals that, following the U.S. Supreme decision affirming the constitutionality of the Patient Protection and Affordable Care Act (PPACA), most employers (88%) remain committed to offer health care benefits to their active employees.

The large majority (up 17% from 2011) comes despite a projected 2013 per employee health care cost of $11,507, an increase of 5.3% from 2012, the survey notes. The finding also comes amid uncertainty relating to the November elections, development of insurance exchanges and the evolving health care delivery system.

“While the most significant changes mandated by health care reform will not occur until 2014, it is essential that companies develop a strategic response and prepare for these changes well in advance of then,” says Ron Fontanetta, senior health care consulting leader at Towers Watson. “These changes will have a profound impact on the way health care is delivered and how many individuals acquire health insurance, most notably retirees.”

Roughly two-thirds of companies say the Supreme Court’s decision has affected their overall health strategy. However, one-third are awaiting the upcoming elections or the opening of insurance exchanges before making significant changes to their health care strategy.

Nearly three-quarters (72%) of the respondents say they lack confidence that the exchanges will provide a viable alternative for active employees by 2015. While few companies are likely to direct active employees to exchanges, nearly six out of 10 of companies with a program are somewhat to very likely to discontinue retiree medical plan sponsorship for post-65 retirees, with 64% considering the same for pre-65 retirees, the survey states.

More than 8 in 10 (83%) of employers are planning to take steps to control their costs to avoid the tax. The $11,507 total cost represents an employer cost of $8,911 per employee and an employee cost of $2,596 per employee. While the increase in employee cost sharing is modest, it is meaningful to employees, as it outpaces average merit increases, the survey states.

The actions and programs that companies are planning or considering include changing plan options (63%), significantly reducing subsidization of coverage for spouses and dependents (38%) and using spousal waivers or surcharges (29%).

Additionally, some employers will pass along a greater percentage of costs to employees. Thirteen percent plan to increase their employees’ share of health care premiums in 2013 by 5 percentage points or more, while 42% plan to increase employees’ share by 1 to 5 percentage points.