This year employers will tackle new regulations associated with health care reform. They will also face new challenges to balance rising health care costs, while providing competitive benefits to attract and retain workers. With so many changes in sight, this year is sure to buzz with five important benefits and HR trends to watch in 2013.
1. Slow and cautious consumer confidence in the US job market: Because there are some signs pointing to a recovery for the economy and job market in 2013, it is important for businesses to carefully consider bolstering their compensation packages and benefits offerings to remain competitive. Meanwhile many businesses are still on the mends and employers are cautious about adding costs, finding ways to offer cost effective health plan options (self-funding and fixed contribution models, and wellness programs) will be important to leverage in the year ahead.
2. A new battle for top talent: New regulations in the health care law are expected to increase transparency surrounding benefits programs, which may in fact push the restart button on the battle for top talent. With employers required to boost communication to their employees surrounding health care plans and exchange eligibility, workers will increasingly be better equipped with information to become more engaged in benefits decisions. This means employees will have visibility into their employer’s investment in their overall benefits offerings.
An example of this increased transparency is the new tier assignment of health plan actuarial value. Health plans within the public exchange are clearly assigned a metal based on the percentage of medical expenses paid by the insurance plan. The benchmark plan in the exchange is silver, paying 70 percent of medical expenses or actuarial value. 3 Employer-provided coverage must meet similar standards,* or the employer may be subject to penalties. Savvy employers who meet or exceed these standards can leverage internal communications to promote their enhanced benefits options, giving them an upper hand when it comes to attracting and retaining talented workers.
Plan Tiers 3
- Bronze: plan pays 60% of medical expenses (actuarial value)
- Silver: plan pays 70% of medical expenses
- Gold: plan pays 80% of medical expenses
- Platinum: plan pays 90% of medical expenses
Though employers have long recognized the importance of employee benefits, now – more than ever – benefits will make a big difference for employee satisfaction, retention and productivity. In fact, 1-in-2 U.S. employees say that improving their benefits is one thing their employer can do to keep them in their job (see side panel “Benefits Matter”). 4 Employers stand the risk of losing loyal and talented workers to competitors if they don’t offer benefits plans that employees believe meet their needs. As employees are looking to their employers to understand rising health care costs, businesses must arm themselves with benefits that meet employee needs and effective workforce communication if they plan to protect and retain a talented workforce.
*Employee contribution does not exceed 9.5 percent of the employee’s annual gross income or the plan pays less than 60 percent of covered health expenses. 5
Benefits Matter 4
- 1-in-2 U.S. employees (49%) say that improving their benefits is one thing their employer can do to keep them in their job.
- Workers who are extremely or very satisfied with their benefits program are 6 times more likely to stay with their employer than those workers who are dissatisfied with their benefits program.
- 61% of employees believe they’d be at least somewhat likely to accept a job with a more robust benefits package but lower compensation.
3. Emergence of the health care consumer: Ready or not, employees are beginning to take the driver’s seat when it comes to making health care benefits decisions. Not only does health care reform require an evolution of consumer-directed communications, but rising health care costs are driving many businesses to move away from fixed benefits to fixed contribution models – shifting more costs to policyholders everywhere. As a result, there is a need for individuals to better understand and make decisions about health care. To compete with a new health care culture, businesses will need to become more proactive with marketing their workplace benefits.
4. Tech savvy solutions compete with desire for face-to-face support: With consumers making more health care decisions, we will increasingly see technology solutions to match their needs. Workers will want easy-to access FAQs, calculators, benefits payouts and other HR resources at their fingertips; while they are showing a strong value for in-person experiences when it comes to understanding and enrolling in plans.
According to a 2012 ADP Research Institute study, mid-to-large sized companies are progressively looking to mobile technologies for HR solutions, and they are seeing positive results. 6 The report found:
- 81% of large and 76% of midsized organizations report improved workforce satisfaction
- 78% of large and 73% of midsized firms see improved real-time decision making
- 75% of large and 71% of midsized companies observe improved workforce productivity
While consumers will want easy access to FAQs, calculators, benefits payouts and other HR resources, they are showing a strong value for in-person experiences when it comes to understanding and enrolling in benefits. In fact, 43 percent of employees say their preferred method for benefits communication is still from an HR or benefits professional at their company. 4 This means businesses cannot underestimate the value of meeting with employees and providing a benefits consultant or broker to answer benefits questions. It may help workers to make better, cost-saving benefits decisions, 50 percent agree they would be more informed about health insurance choices if they met with a benefits consultant during open enrollment. 4
5. Enduring value of out-of-pocket cost support: If your employees are like most Americans, they are likely living paycheck to paycheck, and are hard pressed by increased expenses — no matter how small. A recent Aflac study reveals that 33 percent of workers at small businesses have less than $500 in savings for out-of-pocket health care costs.
1 With so many workers lacking a sufficient financial safety net, supplemental policies can be viable options to help protect your workers.
Supplemental policies help policyholders cope with daily living expenses and out-of-pocket costs associated with accidents or illnesses — costs major medical insurance was never intended to cover. These policies pay in addition to major medical insurance, including policies that may be in place through public and private health care exchange options.
There are also direct bottom-line benefits, when a company makes voluntary insurance available to their employees. The Aflac study, conducted by Research Now, found that employees enrolled in or who are offered voluntary insurance plans at their company are more likely to say they are satisfied with their benefits package and that it meets their families’ needs. 4 In addition, a higher percentage of these employees say they are taking full advantage of their employee benefits options and that their current benefits package is more competitive than the plans their peers are offered. 4
Getting down to business
The uncertainties of 2012 are behind us; the US Supreme Court ruling on the Patient Protection and Affordable Care Act (PPACA) is in place, the presidential election is decided, and states are nearing the deadline for deciding if they will establish a state-run health care exchange.
This year, businesses are responsible for revised W-2 reporting, and communicating health care exchange eligibility to employees. Additionally, with significant regulations and fees going into effect in on January 1, 2014, health care is an important discussion from every manager’s office to the boardroom table. The health care challenges of 2013 are in full view and it’s time to get down to business.
The majority of employers (88%) say they will continue to offer health benefits to active employees in 2014, still 24 percent say they will likely follow the path taken by other industry leaders. 7
Where do I go from here?
As you navigate health care reform, Aflac Insights will continue to provide helpful information at: aflac.com/insights. You may also be interested in:
To learn more about health care reform and coverage available in your state, visit healthcare.gov, http://cciio.cms.gov and irs.gov.
1 Gallup Economy, November 27, 2012, U.S. Economic Confidence Steady Last Week, accessed November 28, 2012, from http://www.gallup.com/poll/158954/economic-confidence-steady-last-week.aspx
2 Conference Board, November 27, 2012, The Conference Board Consumer Confidence Index® Increases Again, accessed November 28, 2012, from http://www.conference-board.org/press/pressdetail.cfm?pressid=4662
3 Congressional Research Service (2012). Health Insurance Exchanges Under the Patient Protection and Affordable Care Act (ACA), accessed on November 9, 2012, from https://www.fas.org/sgp/crs/misc/R42663.pdf
4 2012 Aflac WorkForces Report, a study conducted by Research Now on behalf of Aflac, January 24–February 23, 2012.
5 Congressional Research Service (2010). Summary of Potential Employer Penalties under the Patient Protection and Affordable Care Act (ACA), accessed on November 9, 2012, from http://www.ncsl.org/documents/health/EmployerPenalties.pdf
6 ADP Research Institute (2012). Mobile Technology Makes Mobile HR Solutions A Game-Changer, accessed on November 27, 2012, from http://www.adp.com/tools-and-resources/adp-research-institute/insights/insight-item-detail.aspx?id={F7F82D9F-10E4-493A-9E3E-FA72BC87E699}
7 Towers Watson, 2012 Health Care Trends Survey, accessed on November 8, 2012, from http://www.towerswatson.com/assets/pdf/8139/TW-HealthCare-Trends-Survey-NA-2012.pdf