Monday, July 12, 2010

Survey reveals employers' reactions to various health care reform provisions

Now that health care reform legislation is law, how are employers responding to it? A key takeaway from a recent survey on this topic by the International Foundation of Employee Benefit Plans (IFEBP): Despite a slew of health care reform challenges, most (87%) employers remain confident that they will continue to offer health care benefits to their active employees because they are critical to employee recruitment, retention and remaining competitive.

According to Sally Natchek, Senior Director of Research at the IFEBP, “employers at this point are reacting to the first wave of requirements, knowing they need to make some initial immediate decisions. They are also looking at the next few years and how the timeline of regulations will impact their organizations.”

Extension of health care benefits to children up to age 26. Twenty percent of employers are taking immediate action to change eligibility requirements for employees' adult children up to age 26. The majority of employers however (67%), report that they will not extend coverage to dependents up to age 26 until required by law; about 5 percent of respondents' plans say they currently meet legal requirements and 9 percent are not sure.

A large majority of employers (75%) identify extending coverage to adult children until age 26 as the major reform requirement impacting plan costs.

Early retiree reinsurance program. The survey found that just over half (52%) of employers who currently offer medical benefits to retirees plan to take advantage of the one-time federal reinsurance program established by health care reform legislation. Many (35%) have not yet decided whether they will apply and just 13 percent have decided not to apply.

"Even before health care reform, employers offering benefits to retirees experienced increased financial strain in the form of an aging population and escalating health care costs," explained the IFEBP’s Natchek. "New requirements such as eliminating the federal income tax deduction for the subsidy that employers receive for maintaining drug coverage for Medicare-eligible retirees could increase the likelihood that employers will take a fresh look at their medical strategy for retirees."

Other key findings. Additional results from the survey are as follows:
  • One in five employers (21%) is planning to add or increase emphasis on high-deductible health plans in the next 12 months. Close to 70% of these employers are likely to focus on account-based plans linked to health savings accounts.
  • Close to half of all respondents (48%) are focusing on redesigning their health plans so that by 2018, their plans will avoid triggering the excise "Cadillac" tax for high-value plans.
  • Sixty-six percent of employers agree that their organizations will take advantage of the new legal provision that will offer increased levels of financial incentives available to employees who participate in employer-provided wellness programs; 9% disagree, and 25% are not sure.
  • Employers are planning to communicate and educate their employees on the new legislation through e-mails to participants (51%), special written communication pieces (49%) and their organization's Web site (42%). Only one-third of employers (37%) have already communicated with employees; almost half (42%) are planning communication efforts for annual enrollment.
For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.


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