Despite all the attention the public Obamacare exchanges have been getting, the vast majority of Americans will still sign up for health insurance this year the way they always have: by using the open enrollment process at work this fall.
While many of the plans and benefits for workers will be similar to those in the past, continued corporate efforts to rein in health care costs and other trends in corporate benefits mean there may be some changes.
Here’s a guide to 10 changes you may see to your health and other workplace benefits this year:
1) Higher employee costs. As employers look for ways to trim costs, they’ve successfully transferred a larger portion of their health care premium expenses onto employees. In the past 10 years, employers’ contributions to premiums have increased 80 percent, but employees’ contributions have increased by 89 percent. The average worker now shells out about $4,600 per year for family coverage, more than double what was paid a decade ago, according to the Kaiser Family Foundation.
Companies have even greater incentive to keep costs down now, given that in 2018, they’ll be charged a tax for providing workers with high-cost “Cadillac” health benefits. “They’re going to do everything they can to keep costs down, so that their plans come in under the prescribed thresholds,” says Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management.
2) A shift to private exchanges. A growing number of businesses are opting out of providing traditional insurance in favor of private exchanges, which allow consumers to search for health insurance in much the same way they’d search for a vacation package on Travelocity.com.
The companies are providing workers with a set dollar amount they can spend on the exchanges – and employees who want a more robust plan can make up the difference out of pocket. This year, about a million workers will buy their employer-sponsored coverage via private exchange, but that number is expected to surge to 40 million in the next five years, according to a recent report by Accenture.
3) More options for consumer-directed plans. A whopping 80 percent of employers said they planned to offer a high-deductible health plan in association with a health reimbursement account to employees in 2014, according to a recent Towers Watson report. Right now, just 10 percent of employers offer only a high-deductible plan to their consumers, but 44 percent expect to move entirely to such plans within the next three to five years, according to a report by benefits consulting firm Aon Hewitt.
4) Better behavior incentives. In recent years, more companies offer financial incentives to employees who participate in health assessments or behavioral programs aimed at improving their health. Now, businesses are starting to enforce tougher requirements in order to earn those incentives. In 2013, 16 percent of companies tied incentives to measurable improvement, while 31 percent said they are contributing to such an approach this year, according to a Towers Watson report. “If employers can get employees to maintain their health, there are benefits there on both ends,” says Craig Rosenberg of Aon Hewitt.
5) More voluntary benefits. In an effort to offer more customized benefits plans to their employees, companies are increasingly offering a suite of voluntary benefits – from pet insurance to prepaid legal services. “Employers started offering more voluntary benefits during the recession when they couldn’t expand their more traditional benefits,” says Lenny Sanicola, senior practice leader on benefits at WorldAtWork, a human resources association.
A Prudential survey of corporate insurance brokers found that 44 percent expect increased demand for such benefits over the next five years. They expect the biggest increase in critical illness insurance.
6) A move toward PTO. Companies are increasingly moving toward “paid-time off” leave policies, which allocate a set number of days for all time off, rather than sorting days into buckets for vacation, sick leave and personal time. Last year 52 percent of companies had PTO policies, up from 42 percent in 2009, according to the Society for Human Resource Management.
7) Expanded work/life programs. Offering increased work/life initiatives – from flex time to caregiving assistance for both children and elderly parents – has become a key priority for companies in a competitive global marketplace. The Prudential study found that expanding such initiatives was a top priority for employers, along with expanding wellness and preventative programs.
8) The Roth 401(k) option As more millennials enter the workplace, employers are looking for ways to tailor the 401(k) investment options to their needs. Enter the Roth 401(k), a workplace investment account on which you pay taxes upfront, but can make withdrawals tax-free for retirement.
These accounts are often a good fit for young investors, since their investments will have decades to grow tax-free, and the taxes paid now will likely be less than those they would pay in retirement. Already about half of employers allow workers to invest in a Roth 401(k), but a third of those who don’t offer this option were considering adding it by 2014, according to an Aon Hewitt survey.
9) Independent investment advice. Roughly half of companies offer employee access to financial advice to help them make retirement saving decisions. A growing number of employers are contracting for that advice with advisers who don’t work with the plan’s investment provider. Last year, two-thirds of employers gave workers access to independent investment advice, a 20 percent increase since 2008, according to the American Benefits Council. Part of the reason for the shift is the Pension Protection Act of 2006, which outlined new requirements for investment advice via employers.
10) Mobile first. Employers are quickly realizing that one of the best ways to reach workers is via their mobile phones. Last year, 32 percent of employers used mobile technology for health care benefits, but 52 percent said they planned to add such technology – including apps for insurance, prescription refills and benefits enrollment – in the next three years, according to a study by WorldatWork.