Employers remain focused on controlling costs, avoiding “Cadillac” tax
Despite already modifying their benefit plans last year, employers
expect their healthcare costs to rise again in 2016, which will require
additional changes, according to the Employee Benefits Trend Study
released today by Wells
Fargo Insurance, part of Wells
Fargo & Co (NYSE: WFC). Fifty eight percent of employers
surveyed expect their medical plan costs to exceed the thresholds for
the Affordable Care Act (ACA) excise
tax, or “Cadillac”
tax, which was originally to take effect in 2018, but has been
delayed until 2020. Additionally, 70 percent of employers expect their
budgets for benefit plans to increase, as human capital and health and
productivity remain key issues for businesses to manage.
The Employee Benefits Trend Study surveyed more than 650 middle-market
companies and large corporations to better understand how organizations
are responding to health care reform requirements, while also developing
a competitive benefits strategy.
“As they balance business goals with controlling cost, employers are
also exploring additional changes to their plans to avoid the Cadillac
Tax,” said Dan Gowen, national practice leader with Wells Fargo
Insurance’s Employee
Benefits National Practice. “The rapidly changing market and delay
in the tax implementation provides another opportunity for employers to
be creative as they continue to refine their benefit plans.”
Half of the employers in the study said they will continue to make
changes to their plans either this year or in 2017 by adding a high
deductible plan option (52 percent), increasing the employee
contribution percentage (56 percent), or increasing co-insurance
features (55 percent).
Employers are also making strategic changes to plans that address not
only the physical well-being of their employees, but also chronic
condition management and mental, financial, and social well-being. The
survey found that as an employee engagement strategy, employers are
taking a multi-pronged approach by adding incentives or penalties and
increasing health and wellness offerings:
-
Voluntary benefit solutions – As more employers offer high
deductible health plans, the C-suite is also aware of the financial
exposure that employees face with these types of plans. As a result,
they are looking to mitigate those costs by offering voluntary
benefits solutions (e.g. critical illness and accident insurance).
-
Wellness offerings – Employers of all sizes are seeking ways to
encourage a healthier and more productive workforce. Fifty one percent
of companies expect to increase wellness offerings, and 37 percent
will add wellness incentives or penalties to their programs in 2016.
-
Focused on return on investment (ROI) – 91 percent of C-suite
respondents said improving the health of employees is important as it
correlates with lower medical costs, reduced absenteeism, and
increased productivity.
Aside from becoming compliant with the ACA and lowering costs, the study
also found that C-suite executives are making changes to their plans
because of an increased focused on attracting and retaining talent, with
62 percent saying it is a top concern, up from 45 percent last year.
“If the economy continues to improve, the demand for talent will grow,
and having a benefits program that fits the company’s culture is crucial
to securing key talent,” said Gowen. “As employers focus on attracting
and retaining talent, they can partner with their insurance broker and
employee benefits advisor to explore making changes that best support
their business goals and strategies.”
Wells Fargo’s Employee
Benefits National Practice helps customers with financial
underwriting and insurance, health and productivity risk management,
benefits communication and administration, and compliance with health
care reform.
The practice has also released its 2016
Employee Benefits Market Outlook, which provides additional insights
and trends on the market from the practice leaders at Wells Fargo
Insurance.
About Wells Fargo Insurance
Named Best Insurance Broker in the U.S. by Global Finance Magazine1,
Wells
Fargo Insurance provides solutions for a wide range of customers,
including retail consumers, high net worth individuals, small
businesses, as well as middle market and large corporate customers.
Wells Fargo Insurance writes or places $11 billion of risk premiums
annually in property, casualty, benefits, international and personal
lines.
About
Wells
Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.8 trillion in assets. Founded in 1852
and headquartered in San Francisco, Wells Fargo provides banking,
insurance, investments, mortgage, and consumer and commercial finance
through 8,700 locations, 13,000 ATMs, the internet (wellsfargo.com) and
mobile banking, and has offices in 36 countries to support customers who
conduct business in the global economy. With approximately 265,000 team
members, Wells Fargo serves one in three households in the United
States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2015
rankings of America’s largest corporations. Wells Fargo’s vision is to
satisfy our customers’ financial needs and help them succeed
financially. Wells Fargo perspectives are also available at Wells
Fargo Blogs and Wells
Fargo Stories.
1 2015 Ranking includes Wells Fargo Insurance Services USA,
Inc., Wells Fargo Insurance, Inc., and Rural Community Insurance Company
