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Times, they are a-changin’ – especially when it comes to employer-sponsored health insurance and benefits packages. Health care costs are expected to rise by 6.5 percent in 2018, the first rate increase in three years.1 And while health care legislation in the U.S. continues to be in a state of flux, employers, insurers and medical providers are working to find innovations that will build better benefits solutions for the path forward. It’s something of a benefits revolution; a transition from the traditional one-size-fits-all benefits package to one that is unique and flexible – a benefits package that works for both the employer and the worker. Here are the top trends to watch this year.
It’s estimated that 20 to 30 percent of the working-age population is engaged in some form of independent work either full time or for additional income.2 The independent workforce is rapidly growing, yet the vast majority does not receive employee benefits with their alternative “gig.” This trend makes portable benefits especially attractive – those that employees can take with them even if they move on to another job, freelance work or take on more than one work opportunity. Additionally, some members of Congress and at least four states are considering proposals aimed at delivering benefits to gig economy workers.3
Along with repealing the individual mandate through tax reform, President Trump’s health care executive order signed in late 2017 takes aim at expanding or relaxing rules for (1) association health plans, (2) health reimbursement accounts and (3) short-term limited duration insurance. The proposed changes will be welcome news for some. However, certain aspects of the executive order are also controversial and have raised concerns that the relaxation of rules could result in inferior coverage that would undermine the protections the Affordable Care Act imposed on employer-sponsored health insurance coverage.4 While the details still remain to be seen, it’s safe to expect some type of movement, and potentially increased popularity, for these plans in the year ahead.
In an effort to slow down the increasing cost to employees from shifting health care costs, employers continue to look for innovative benefits design options – for instance, offering a high-deductible health plan along with a more traditional PPO option to give employees more choice. Other popular moves include offering lower costs with narrower networks or value-based pricing. Employers are also taking a hard look at how to ensure their workforce is healthy to prevent unnecessary trips to the doctor’s office, emergency room or operating table. When employees are healthier, they are less likely to need to use their benefits for high-cost procedures and medicines, which ultimately can help to reduce insurance rates.
While many factors contribute to rising health care costs – preventable disease carries a substantial portion. For instance:
Many employers are betting that incentives will motivate employees to stay healthy by offering extra rewards for healthier lifestyles, such as being a non-smoker or maintaining a recommended body mass index (BMI). More than half of employers with wellness programs say they already offer some type of wellness incentive, and an overwhelming share of employers (72 percent) are extremely or very interested in health care incentives or discounts for healthy lifestyle choices to solve benefits challenges.8
Companies with benefits programs that meet business objectives are likely to offer value-added services, such as health and wellness discounts, employee assistance programs and flexible spending accounts. These added-value benefits appeal to employees. Services that employees wish their employers offered during enrollment include:8
Smaller percentages would like to see legal and estate planning services (16 percent) or pet insurance (12 percent), but benefits like these, which can help improve employees’ well-being, are more likely to be on the table.8
Even the best major medical policies don’t pay for everything – and that’s where voluntary insurance comes in. While health care costs are rising, employees continue to express that they aren’t financially prepared for out-of-pocket health care costs. In fact, 43 percent of adults with health insurance say they have difficulty affording their deductible, and roughly one-third say they have trouble affording their premiums and other cost sharing.9
That’s why insurance to help protect consumers from all but inevitable out-of-pocket costs, as well as the cost of everyday expenses like gas, rent or mortgage, and other bills that can pile on when a person is out of work because of a health event, is becoming more popular. A full 81 percent of employees see a growing need for voluntary insurance benefits, and 90 percent at least somewhat agree that voluntary benefits are essential for a comprehensive benefits program.8
There’s no doubt that technology is the new normal for benefits administration. Since 2011, online open enrollment at companies has seen large gains, from 38 percent to 61 percent in 2017.8 And although improving employee enrollment experience is a top priority, many employers are turning to technology solutions to solve HR challenges, such as reducing staff time and administration, better data management and reducing costs. That’s why insurance providers are finding more ways to branch out to offer a wide variety of products and services – everything from insurance products to integration with payroll and human resources information systems and support for benefits services year around. It’s helping to reduce paperwork and makes for a seamless experience for both HR and their workers.
Health insurance may be known for fine print and difficult-to-understand jargon, but savvy insurers and providers are working hard to change how customers experience their benefits. Companies that excel at customer experience are more likely to see revenue growth than those that lag behind.10 That’s why these companies are going the extra mile to map their customer experience and improve customer interactions from their first impression with the brand – perhaps through a brochure, website or agent – to benefits enrollment and claims processing. Surprising and delighting the health insurance customer is very likely something to expect more of, and it may even help with retention, because employees who are satisfied11 with their benefits are also likely to be extremely or very satisfied with their jobs (63 percent).8
Instead of outsourcing benefits administration, new technology is making it possible for mundane or repetitive benefits processes, which would normally be done by human beings, to be “insourced” entirely by robots. These robots aren’t much like the humanoid cartoon robots we know and love, but they are machines that can answer questions that come to a call center or provide verification and documentation services. Robotics is making the customer experience better by allowing claims to be paid and questions answered faster and more efficiently than ever before. Managing employee communications, benefits enrollment questions, verifying claims or policyholder information, and benefits reporting are just a few ways that insourcing could help free up HR staff in the not so distant future.
1 PwC (2017). Medical cost trend: Behind the numbers. Accessed on Nov. 29, 2017, from https://www.pwc.com/us/en/health-industries/health-research-institute/behind-the-numbers.html.
2 McKinsey& Company (2017). Independent work: Choice, necessity, and the gig economy. Accessed on Nov. 29, 2017, from https://www.mckinsey.com/global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy.
3 NPR (2017) Efforts increase to bring health and other benefits to independent workers. Accessed on Nov. 29, 2017, from https://www.npr.org/sections/health-shots/2017/06/22/533943837/efforts-increase-to-bring-health-and-other-benefits-to-independent-workers.
4 Aflac Federal Relations (2017). The president’s executive order explained. Accessed on Nov. 29, 2017, from https://www.aflac.com/business/resources/advisories/the-presidents-executive-order-explained.aspx.
5 Centers for Disease Control and Prevention (2017). Adult obesity facts. Accessed on Dec. 4, 2017, from https://www.cdc.gov/obesity/data/adult.html.
6 The American Cancer Society (2017). Tobacco: The True Cost of Smoking. Accessed on Dec. 4, 2017, from https://www.cancer.org/research/infographics-gallery/tobacco-related-healthcare-costs.html.
7 The Department of Health and Human Services (2016). The opioid epidemic: By the numbers. Accessed on Dec. 4, 2017, from https://www.hhs.gov/sites/default/files/Factsheet-opioids-061516.pdf.
8 Aflac (2017). Aflac WorkForces Report. Accessed on Nov. 29, 2017, from https://www.aflac.com/business/resources/aflac-workforces-report/default.aspx.
9 The Henry J. Kaiser Family Foundation (2017). Americans’ challenges with health care costs. Accessed on Dec. 1, 2017, from https://www.kff.org/health-costs/poll-finding/data-note-americans-challenges-with-health-care-costs/.
10 Forrester (2015) Does the customer experience really drive business success? Accessed on Dec. 4, 2017, from https://www.forrester.com/report/Does+Customer+Experience+Really+Drive+Business+Success/-/E-RES134646.
11 Includes somewhat satisfied, extremely satisfied and very satisfied.