Conrad Siegel Releases Annual Report: Pennsylvania Employers Shifting Healthcare Costs to Employees, Offering Financial Incentives

Posted On On: June 30, 2017 Categories Filed Under: Member News

Harrisburg, PA – June 19, 2017Conrad Siegel Actuaries, delivering comprehensive employee benefits services, today announced the results of its annual Medical and Prescription Drug Survey, an employee benefits survey that reports and analyzes employee healthcare trends across Central Pa. businesses.

The survey, conducted in December 2016, reflects a continued trend towards consumer-directed healthcare plans, cash compensation for employees who waive healthcare coverage, and healthcare savings accounts (HSA’s), with a decrease in employer contributions.

“Over the last four years, more employers have implemented greater restrictions on spousal coverage and have begun offering high-deductible plan and HSA options. At a high level, this means the responsibility for increased healthcare costs continues to shift from the employer to the employee,” said Rob Glus, partner at Conrad Siegel Actuaries. “These developments translate to a greater emphasis on financial and physical wellness, as employees are encouraged to be educated on healthcare options, savings strategies and preventive care.”

Employers Favor Cash Compensation, Limit Spousal Coverage

The survey revealed that 41 percent of employers offer cash compensation to employees who waive medical and prescription drug insurance, with an average pay-out of $2,047 per year. This statistic is up 8 percent from 2015, when 33 percent of survey respondents offered cash compensation at an average amount of $2,083 annually.

“Employers continue to look for ways to impact cost savings of their healthcare plans. By incentivizing employees to not be on the plan, and sending spouses to obtain coverage through their own employer, employers are able to avoid significant benefit cuts to existing employee coverage,” continued Glus.

Forty percent of employers have some form of spousal coverage restriction for medical and prescription drug insurance, compared to 33 percent in 2015. Of those who have a provision, 25 percent require a surcharge to cover the spouse. The surcharge has increased significantly over the last three years. In 2016, the average surcharge for spousal coverage was $2,766 per year. Comparatively, the average surcharge was $2,288 in 2015 and $1,730 in 2014. Additionally, of those with a provision, 43 percent of employers do not allow spousal coverage if the spouse has access to healthcare through their own employer.

High-Deductible Plans and HSA’s See Steady Increase

Eighty-seven percent of the plans offered by survey respondents require an individual deductible, a five percent increase from 2015. Additionally, the survey reflects a continued increase in the cost of the deductible – over 65 percent of plans had a deductible of $500 or more, a 3 percent increase from 2015.

The report shows slow, but steady growth for HSA options. In 2014, 20 percent of employers offered an HSA to employees and 73 percent funded part of the account. Comparatively, in 2016, 26 percent of employers offered HSA’s to employees and 84 percent funded part of the account. National data from the Kaiser Family Foundation’s Employer Health Benefits survey reflects this gradual growth in HSA offerings as well. Similar growth is also seen in high-deductible offerings paired with health reimbursement accounts (HRA’s).

Co-Payments Remain Consistent

“Prescription drug co-payments have notably remained consistent for several years, even as employers have turned to other aspects of plans to minimize rising costs. Employers value having reasonable prescription co-payments because they want employees to have access to the medicines they need to be healthy and productive, and do not want to price employees out from being able to afford this coverage,” said Glus.

Over the last three years, the average price of generic prescription drug co-payments has stayed between $9 and $10, while the price for formulary co-payments has averaged between $30 and $32, and the price for non-formulary co-payments has averaged between $51 and $52.

Approximately 110 companies of all sizes responded to the survey with 60 percent coming from organizations with more than 100 employees. Companies that responded to the survey were from both not-for-profit and for-profit organizations in a wide range of industries including Education, Healthcare, Social Assistance, Government, Manufacturing, and Finance.

Conrad Siegel Actuaries maintains one of the largest, most comprehensive regional employee benefit databases available in central Pennsylvania. Through its regional employee benefits survey program, Conrad Siegel Actuaries is able to benchmark the best practices surrounding local employer benefit programs.

For more information about the Conrad Siegel Actuaries Health & Welfare Survey or to participate, please contact the Benefit Survey Team at benefitsurvey@conradsiegel.com.

About Conrad Siegel

Conrad Siegel Actuaries, named the 2015 Best-in-Retirement Business Award™ winner by Charles Schwab & Co., Inc, is one of the largest and most respected employee benefit firms in the Mid-Atlantic region. Recognized as both an industry leader and a trusted advisor, the firm stands apart by offering independent, fee-based services backed by careful attention to detail. Conrad Siegel partners with its clients to offer a comprehensive source for all employee benefit needs. For more information, please visit www.conradsiegel.com.

Conrad Siegel Actuaries and its employees are independent of and are not employees or agents of Charles Schwab & Co., Inc. (“Schwab”). Schwab does not prepare, verify or endorse information distributed by Conrad Siegel Actuaries. The Best-in-Retirement Business IMPACT Award™, part of Schwab’s IMPACT Awards® program, is not an endorsement, testimonial endorsement, recommendation or referral to Conrad Siegel Actuaries with respect to its investment advisory and other services.

Media Contact:

Lorianne Walker

Abel Communications for Conrad Siegel Actuaries

Phone: 410-688-1330

lwalker@abelcommunications.com

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