Employers to face health insurance challenges in 2016
Results of a new survey suggests large employers will face more health insurance challenges in 2016 from surging health care premiums.
The Spring Healthcare Trend Survey from Wells Fargo Insurance, part of Wells Fargo & Co., could make it difficult for employers to provide competitive benefits to employees that comply with healthcare reform regulations.
“The results of the survey indicate rising cost trends that will force companies into a delicate balancing act of providing competitive benefits while also managing costs effectively and complying with regulations,” said Dan Gowen, national practice leader with Wells Fargo Insurance’s Employee Benefits National Practice. “We continue to work with our employee benefit customers to design and implement the best programs to increase employee engagement and support their financial goals.”
Wells Fargo collected information from insurers for the survey that revealed:an increase in healthcare claims, increased cost for specialty drugs and rising health care premiums that are expected to surpass inflationt over the next 18 months.
Claim trends are predicted to be 0 to 1 percent higher than 2015 for most products including HMO, PPO, prescription drug plans, indemnity plans, consumer driven health insurance and POS plans.
Health insurance plan changes, wellness initiatives needed
Another challenge for employers is the so-called Cadillac or excise tax that are due to be charged in 2018. The impetus of the tax is to encourage employers to offer employees cost-effective plans that require more out of pocket expense, otherwise known as cost-sharing.
Thirty-eight percent of large employers are expected to reach the excise tax threshold if they do not make changes.
"It’s vital employers strive to manage healthcare cost trends in order to avoid excise taxes in the long run,” said Nick Allen, national practice leader for Actuarial Services with Wells Fargo Insurance. “For many employers, healthcare cost trends will be the foremost determining factor as to whether and when their plans will exceed the excise tax dollar limits.”
Insurers responding to the survey agreed wellness initiatives, accountable care organizations (ACOs), and narrow- or tiered provider network offerings are top three initiatives to develop in 2015.
“Employers need to have a realistic expectation of what will happen to their health care cost if they don’t make any changes to their plan or health of their employee population,” said Gowen.
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