Pennsylvania Employers Look to Health Benefit Plan Design Changes to Reduce Rising Costs
On: July 6, 2018 Filed Under: Member News
Conrad Siegel’s Annual Medical & Rx Drug Survey Reveals Spousal Coverage Provisions, High Deductible Plans Are Among Leading Methods to Contain Costs
Harrisburg, PA – June 2018 – Conrad Siegel, delivering comprehensive employee benefits and investment advisory services, has announced the findings of its annual Medical and Prescription Drug Survey. The survey reports and analyzes employer healthcare trends across Central Pa.
The survey results reveal trends and changes employers are making in medical plan design to contain rising costs, including a continued shift towards high deductible plans, increased limitations around spousal coverage, increased premium-sharing for employees and incentives to waive coverage.
“Over the past several years, we see employers continuing to shift to these tactics to manage rising healthcare costs,” said Rob Glus, Partner at Conrad Siegel and Chair of the Health and Welfare committee. “This year’s survey results come as no surprise, in keeping with the national trend of employers continuing to move toward consumer-driven plans with higher deductibles and higher copays.”
Employers Self-Funding Medical Coverage Remains Flat
Over the past four years, the percentage of employers self-funding health benefits has remained relatively flat, at approximately 50 percent. While there was a slight uptick in the number of employers self-funding after the Affordable Care Act (ACA) passed, the shift has not been nearly as significant as expected. This is consistent with national survey data which shows only a modest increase in self-funding post-ACA.
Employers Limit Spousal Coverage, Offer Financial Incentives to Waive Coverage
Over the past few years, employers have implemented tighter restrictions on spousal coverage to reduce overall costs. The survey showed that 45 percent of respondents have a spousal coverage provision for medical and prescription drug insurance, up from 40 percent last year. Of those, 35 percent require a surcharge to cover a spouse. Another 50 percent of respondents do not allow coverage if the spouse has access to coverage through their own employer. The remaining 15 percent have special agreements with unions or rules that include spousal coverage counting as the primary insurance.
In a continued effort to reduce costs, 42 percent of companies surveyed offer cash compensation to employees who waive medical and prescription drug insurance, an increase from 41 percent the previous year and 33 percent in 2015. The average cash compensation amount is $2,054.
High Deductible Plans Rise Slowly
Of the plans surveyed, 89 percent require an individual deductible and 65 percent of these plans have deductibles that are $500 or more. The number of high-deductible plans being paired with Health Savings Accounts (HSAs) has grown substantially as well, with 33 percent of respondents offering them to employees, up from 26 percent in 2016.
Rx Co Payments Remain Relatively Unchanged
Prescription drug copayments have largely remained consistent over the past few years. Responses show that the average price of generic, formulary and nonformulary prescription drug copayments has remained almost the same for retail and mail order drugs. Copayment prices average at $10 for retail generic drugs, $32 for retail formulary and $54 for retail nonformulary. Copayment prices average at $21 for mail order generic drugs, $64 for mail order formulary and $108 for mail order nonformulary.
“The relatively insignificant changes in overall Rx copays over the past several years indicates that employers recognize that offering affordable prescription drug copayments is an important aspect of their health plan. Adherence to prescription medications, particularly for chronic disease patients, is an important aspect to long-term cost control.” said Glus. “Instead, employers have implemented more aggressive drug management programs to help mitigate rising costs. These programs encourage and/or require people to choose more cost-effective alternatives to keep co-payments low and drive savings and efficiencies for the plan.”
Premium-Sharing Has Increased, Financial Incentives Offered for Wellness Decrease
Overall, employee premium-sharing spiked slightly with this year’s survey. The average premium percent paid by employees increased to 16 percent for singles (up from 14 percent) and 21 percent for families (up from 18 percent). Only 17 percent of respondents report offering financial incentives through lower premium-sharing for participation in worksite wellness programs. This shows a decrease from 2016, when 20 percent of respondents offered the incentive.
The survey was conducted in December 2017 and reflects responses from over 100 companies of all sizes and across multiple industries.
Conrad Siegel maintains one of the largest, most comprehensive regional employee benefit databases available in central Pennsylvania. For more information about Conrad Siegel’s health and welfare services, please visit https://conradsiegel.com/healthcare/.
About Conrad Siegel
Conrad Siegel is an employee benefit and investment advisory firm headquartered in Harrisburg, Pa. that provides customized retirement, healthcare benefit and investment planning solutions for businesses and individuals. The firm offers independent, fee-based services backed by careful attention to detail. Its investment advisors are independent of any financial institution and do not receive commissions, positioning them to make recommendations in their clients’ best interests. Conrad Siegel partners with its clients to serve as a comprehensive source for all employee benefit and investment advisory needs. For more information, please visit https://www.conradsiegel.com/.
Investment Advisory Disclosure
All investment advisory services and fiduciary services are provided through Conrad Siegel Investment Advisors, Inc. (“CSIA”), a fee-for-service investment adviser registered with the U.S. Securities and Exchange Commission which operates in a fiduciary capacity for its clients. Investing in securities involves the potential for gains and the risk of loss and past performance may not be indicative of future results. CSIA and its representatives are in compliance with the current notice filing registration requirements imposed upon investment advisors by those states in which CSIA maintains clients. CSIA may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by CSIA with a prospective client shall be conducted by a representative that is either registered or qualified for an exemption or exclusion from registration in the state that the client resides.
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Phone: (443) 961-2643