Employers Adjusting Employee Benefits

Large businesses expect to pay between 4 and 5 percent more for health-care benefits for their employees in 2015 after making adjustments to their plans, according to employer surveys conducted this summer.

Few employers plan to stop providing benefits with the advent of federal health insurance mandates, as some once feared, but a third say they are considering cutting or reducing subsidies for employee family members, and the data suggest that employees are paying more each year in out-of-pocket health care expenses.

The figures come from separate electronic surveys given to thousands of mid- to large-size firms across the country by Towers Watson, the National Business Group on Health and PriceWaterhouseCoopers, consulting groups that engage with businesses on health insurance issues.

Bracing themselves for an excise tax on high-cost plans coming in 2018 under the Affordable Care Act, 81 percent of employers surveyed by Towers Watson said they plan to moderately or significantly alter health-care benefits to reduce their costs.

The excise tax will be levied on companies offering annual benefits that exceed $10,200 for individuals or $27,500 for families. For any costs above those amounts, businesses would be taxed 40 percent on the difference. Nearly three quarters of the businesses interviewed by Towers Watson said they are concerned they will be subject to the excise tax.

To lower their tax bill, many companies are looking to cut their premiums by raising deductibles. Many also are making greater use of health-care savings accounts.

“My takeaway from the employer surveys is that this trend is accelerating,” said Paul Fronstin of the nonprofit Employee Benefits Research Institute.

The National Business Group on Health finds 81 percent of employers offering insurance plans that include higher deductibles and an annual health savings account. The savings account allows employees to deposit money tax-free, and employers often deposit a set amount of money into these accounts at the beginning of the year.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary