It can be hard to know what the future will bring. Economic and political drivers shift, seasonal trends come and go and employees' circumstances change. But if there's one thing for sure, 2015 certainly won't be a boring year for benefits. There's plenty in store for small businesses, including cost-reducing strategies and dynamic workforce needs. Here's the pulse on what small-business leaders can look for in the year ahead.
Health insurance exchanges (also called marketplaces) are now part of the employee benefits equation. Especially if you're a small business, these options can provide tax advantages and do some of the heavy lifting usually associated with offering employee benefits.
Here's what to expect:
Bottom line: Take a look – these may be a great fit.
Exchanges can make benefits administration easier for small businesses. Plus, they give employees the option to purchase health care coverage that fits their needs and their budget. If your company has fewer than 25 full-time equivalent (FTE) employees, you may be able to take advantage of tax credits through government exchange options. And, regardless of your company's size, private exchanges can help your company to offer a variety of benefits options.
Controlling costs is always a top priority for small businesses. In fact, 53 percent say it's one of their top business objectives.2 So when it comes to rising health care costs, it's no surprise many are looking to rein in costs whenever possible. In 2014, 24 percent of small businesses expected to increase employees' share of premiums, and 24 percent expected to increase employees' copays.2
Shifting costs to employees can have an adverse effect. For example, employees at small businesses say if their employers shift an increasing portion of health insurance costs to them, it would have at least a moderate impact on their:2
That's why many employers are considering ways to save on health care costs, while still protecting their workforce. A few strategies to look for in 2015 include:
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|Account-based health care||
High deductible health plans tied to health savings accounts (HSA) are growing in popularity. The number of people enrolled in HSA-eligible plans hit almost 17.4 million early this year, a nearly 12 percent increase since 2013.3 Additionally, 49 percent of employers offered a flexible spending plan to their employees in 2014, up from 37 percent in 2012.2
|Changes in spouse coverage||
Health care reform doesn't require companies to extend coverage to spouses, and some companies are cutting back on spouse benefits, especially if the spouse can purchase health care through their own employer. Nearly 1 in 10 (7 percent) of small companies eliminated contributions to family coverage in 2013, and 7 percent expected to do so in 2014.2
|Outcomes-based health care||
Companies are beginning to establish ways to keep providers and employees accountable for health outcomes. For providers, employers are looking to bundled pricing arrangements with doctors and hospitals with proven track records for success. For employees, companies are using health screenings and incentives. While just 6 percent of small businesses introduced health care incentives in 2013, 10 percent expected to do so in 2014. And nearly half (45 percent) of small businesses with wellness programs include a wellness screening component.2
|Defined contribution benefits||
Similar to an allowance for employees to spend on the health care they choose, defined contribution is a way for employers to control the amount they pay towards benefits. If the employee wants more robust coverage than their employer's contribution can cover, the employee can choose to pay the remaining portion of the bill. While many details surrounding defined contribution still remain to be seen, the model is gaining consideration, especially as exchanges become more popular.
Bottom line: Strive for balance and effective benefits communication.
Even positive changes to a benefits program can be confusing to employees, but not all changes need to have a negative impact. In fact, 81 percent of employees at small businesses at least somewhat agree a well-communicated benefits program would make them less likely to leave their jobs. To prepare for a smooth transition, communicate with employees frequently and develop a plan to touch base before, during and after a change takes place. Keep in mind the value your benefits bring to recruitment and retention, and discuss your options with a trusted benefits consultant who can help you establish a plan that works within your budget.
Small businesses generally use face-to-face methods of benefits communication such as workplace presentations and one-on-one sessions with a benefits professional, but trends show they are also using online enrollment methods more than ever before. From 2011 to 2014, employees using online enrollment methods at small businesses increased by 62 percent. Other popular methods, including paper and face-to-face enrollment, saw very little change for small businesses during the same period. Most employees at small businesses appear to be happy with the shift: More than 9 in 10 (93 percent) say they're at least somewhat satisfied with their current enrollment method.2
While employers are embracing technology for benefits enrollment, it's important to note the continued importance of face-to-face communication:2
Bottom line: Partner online enrollment with a human touch.
There's no substitute for the conversations an employee can have with a benefits professional, but that doesn't mean there aren't benefits to streamlining some of your administration processes. Making online enrollment available can offer a more convenient process for employees and help reduce time wasted on mistakes with paper forms. Consider online options as a complement to your already successful face-to-face communication methods.
Employees are gaining newfound benefits choices; however, many aren't prepared to take on increasing out-of-pocket health care costs. According to the Health Research Institute (HRI) at PricewaterhouseCoopers, the average premium increase across all states in 2015 is 6 percent.4 Yet, salary increases are only expected to reach 3 percent in 2015.5 Additionally, many employees may unknowingly add to their costs during benefits enrollment. Approximately 25 percent of employees enrolled in private exchanges selected less coverage than they previously had, leading to lower monthly premiums but higher out-of-pocket costs.1
Unfortunately, many employees already say they're having trouble handling increasing health care expenses. The majority of employees who work for small businesses (70 percent) at least somewhat agree they wouldn't be able to adjust to the large financial costs associated with a serious injury or illness, and 59 percent have $1,000 or less available to pay out-of-pocket medical expenses associated with a serious illness or accident.2
Bottom line: Make voluntary benefits available to your workforce.
One way employers can help protect their employees is by adding voluntary benefits to their employee benefits packages. These benefits help provide an extra layer of financial protection. Unlike major medical insurance, voluntary policies pay cash benefits directly to the policyholder (unless assigned otherwise) if they get sick or injured and are a way to offer a broader benefits package to your workforce. Additionally, employees who are offered and enrolled in voluntary benefits by their employer are 37 percent more likely to say their current benefits package meets their family's needs extremely or very well than those who aren't offered voluntary benefits through their employer.2
This material is intended to provide general information about an evolving topic and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer or individual will have to consider in their benefits decision-making process. We strongly encourage readers to discuss their HCR situations with their advisors to determine the actions they need to take or to visit healthcare.gov (which may also be contacted at 1-800-318-2596) for additional information.
1Accenture (2014). Three million U.S. employees enrolled in private health insurance exchanges in 2014 according to Accenture, accessed on October 14, 2014 from http://newsroom.accenture.com/news/three-millionemployees- enrolled-in-private-health-insurance-exchanges-in-2014-according-to-accenture.htm.
2The 2014 Aflac WorkForces Report, conducted on behalf of Aflac in Jan. 2014 by Research Now, accessed Oct. 13, 2014, from http://workforces.aflac.com/2014-executive-summary.php.
3America's Health Insurance Plans (2014). AHIP: Health savings accounts on the rise, accessed on Oct. 13, 2014, from http://thehill.com/policy/healthcare/211722-ahip-health-savings-accounts-on-the-rise.
4PWC (2014). A look at individual market health insurance rate filings, accessed on Oct. 13, 2014, from http:// www.pwc.com/us/en/health-industries/health-research-institute/aca-state-exchanges.jhtml.
5SHRM (2014). Base salary rise of 3% forecasted for 2015, accessed on Oct. 13, 2014, from http://www.shrm. org/hrdisciplines/compensation/articles/pages/2015-salary-budget-forecasts.aspx.