Rising Costs Force Employers To Adjust Benefits

Many employers are responding to rising medical insurance premium costs by making changes to their health benefits packages, according to benefits consultancy Watson Wyatt Worldwide. The firm, which provides advice to employers on their health care benefit programs, said in a recent report that it had identified several trends for the upcoming open enrollment season.

Growing numbers of employers, according to Watson Wyatt, are introducing new plan designs with fewer options. Some are adding consumer-driven health plans to their range of benefits, although most are offering them as an alternative to, rather than a replacement for, traditional plans. Smaller companies, in particular, are starting to offer tax-advantaged health savings accounts (HSAs). Employers are also considering scaling back the number of HMOs they offer employees, and limiting the networks of PPOs.

In an effort to lower premium costs, the consultancy reported, many companies are increasing copayments for doctors’ visits and hospital care, as well as copayments for prescription drugs of all kinds, including generic drugs. Some employers may also levy a surcharge for covering the spouse of an employee who has access to medical insurance elsewhere.

But the consultancy also reported more positive developments, including the introduction by some employers of disease management programs, which are designed to help employees manage chronic illnesses, such as diabetes or heart disease. These companies are sometimes offering cash incentives or premium reductions to qualified workers who participate in the programs. To help compensate for changes in health care coverage, some employers are also offering voluntary benefits at below-market rates. Voluntary benefits may include automobile and life insurance, cut-rate mortgages, or subsidized fitness club memberships.

Finally, Watson Wyatt said that many employers are in the process of improving their communications with employees on health benefits issues, and launching online support tools to help workers make decisions relating to their personal health and their medical insurance coverage.