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Life Health > Health Insurance

PPACA to prompt decline in employer-provided health coverage

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In 2015, 95 percent of companies expect to retain their employer-subsidized health care coverage in their benefits packages, but only 25 percent of the companies believe they will offer such coverage in another decade.

So concludes Unum in a new report, “Benefits Buyers Study: New perspective on balancing employer costs and employee protection.” The report draws on industry research and Unum data to explore the top challenges affecting the broader benefits market and how these play out for employers and employees.

The study attributes the anticipated decline in employer-subsidized health care coverage to the Patient Protection and Affordable Care Act (PPACA), which has engendered much uncertainty among HR professionals. Employers have “struggled” to remain compliant with PPACA while also paying for additional costs connected with the legislation.

“Many employers continue to wrestle with the pay-or-play decision and may decide that it’s more cost-effective to pay the penalties,” the report states. “If they decide not to play, some of their employees may be able to find comparable, affordable coverage on the public exchanges.”

“But some employees may not be able to find adequate coverage,” the report adds. “A company’s decision not to offer benefits can also hurt employee morale and recruiting efforts.”

About 60 percent of employers surveyed say their health benefit plans will require their company to pay the upcoming health care “Cadillac Tax” if they don’t make plan changes. The levy is a 40 percent excise tax on high-value benefit plans passed as part of PPACA.

Though health care costs are rising at a slower pace than in previous years — 2 percent in 2013, down from 6 percent in 2011 — 2013’s growth in employer health care spending outpaced inflation by more than half a percentage point (2.0 percent vs. 1.5 percent).

The report adds that between 2012 and 2013, workers’ wages increased just 1.8 percent, a gain largely erased by the commensurate rise in inflation. Over the same period, single employees and families experienced 4 percent and 5 percent increases, respectively, in their health insurance premiums.

Among the study’s additional findings:

  • 98 percent of HR professionals say that a shortage of skilled workers, particularly those with STEM (science, technology, engineering and math) skills, will impact the U.S. workplace in the next five years.
  • 78 percent of workers, including millennials, GenXers and boomers, base their acceptance or rejection of a job offer in part on the benefits package.
  • 77 percent of workers believe that missing work for three months because of injury or illness would result in a financial hardship.
  • 74 percent of employees are supportive of or do not object to employers automatically enrolling new employees in employee-paid disability plans so long as the employee can opt out.
  • In the past 10 years, employees have increased their voluntary benefit purchases by $18 billion dollars. In 2013 alone, employees increased this type of spending by nearly 24 percent.

Read the full report here.


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