4 essential employer insights for brokersNews added by Benefits Pro on May 6, 2014
By Dan Cook
Large employers grumble about the cost of providing health benefits, but a survey of some of these companies indicates they still highly value benefits programs and won’t soon back away from providing coverage.
Conducted by Pacific Resources, a Chicago-based benefits advisor, the data comes from mostly Fortune 1000 corporations and clearly supports other data that says benefits are here to stay, at least among the largest companies.
The health plans of the corporations surveyed cover nearly 6 million Americans.
The survey looked at the private exchange issue as well, and found – as have others – that employers are still sniffing around the exchanges to make sure they're a solid option before moving employees in that direction.
“For large employers, it will be critical to determine, at some point, whether moving active employee health coverage to a private exchange is the right move for their organization and its plan participants,” said Paul Rogers, president and COO of Pacific Resources. “This is a complex decision about a new benefits strategy that is still evolving and the survey results tell us that, right now, most large employers are not ready to make that decision.”
Here are the four key survey findings:
1. Employer-sponsored benefits viewed as strategic
Eighty percent of respondents label employer-sponsored benefits as “a strategic asset for attracting, recruiting and retaining employees and an integral part of their employee engagement and productivity strategy.” Just 13 percent said they provide them simply as “a required expense of being in business.”
Three-quarters said they are “fully committed to providing an array of employer-sponsored benefits as a part of their total rewards program and will continue to actively look at all potential tactics to manage the costs associated with their benefits plans including exchanges, wellness programs and other incentives.”
Only one in five of those surveyed are taking a more passive attitude toward plan design and options, and those “expect to delay any changes until they better understand the full impact of the Affordable Care Act.”
2. Perspective on private exchanges is evolving
More than 90 percent of those surveyed claimed to have a “good to excellent” understanding of the private exchanges and the process involved in accessing them. That said, they are just about split down the middle (51 percent v. 49 percent) on whether they have confidence in the exchanges’ future or not.
Along the same lines, respondents were split down the middle when asked whether they had much of an interest in the exchanges as an alternative for coverage. In fact, of the half that had little interest, 37 percent said they had “no plans to evaluate private exchanges.” The other 13 percent “have conducted an evaluation and decided not to move forward with an exchange as a replacement to their current medical benefit plan.”
A mere 3 percent said they currently used a private exchange to provide employee coverage.
Asked how they would evaluate private exchanges, their responses:
3. Cost is the driving factor
- 34 percent said they had not determined an approach;
- 25 percent would perform the evaluation using in-house resources;
- 25 percent would engage a consultant that does not sponsor an exchange;
- 13 percent indicated that they would engage their existing consultant if that consultant sponsored a private exchange.
Although simply offering health benefits came through as a top priority for these employers, cost wasn't far behind. Moving employees to an exchange would be a cost-driven decision, said 85 percent of those surveyed. However, when asked about how much they hoped to save by moving to an exchange, employers couldn’t reach a consensus. About half said they hadn’t set a target savings percent yet, and others said they’d shoot for between 2 percent and 10 percent.
Next in importance after cost savings was employee choice. Two-thirds said plans that offer greater choices appealed to them. Another 37 percent valued a smooth transition from company-sponsored coverage to exchange coverage, and another 36 percent reported that “having a mature product with proven success to manage cost and administrative capabilities” was of value to them.
4. Majority want to remain self-insured
Asked how they would manage plan design if they moved employees to exchange coverage, 60 percent said they’d remain self-insured, and 13 percent said they’d move to fully-insured programs. The rest were undecided, citing various concerns about full-insured coverage, including “the ability to manage administrative and state requirements and the long-term cost effectiveness for fully insured products.”
Originally published on BenefitsPro.com
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