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Employers expect modest health plan cost increases in 2015: Survey

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Employers expect modest health plan cost increases in 2015: Survey

Employers are expecting only modest increases in 2015 in their group health care plan costs, but are looking at new approaches to continue to keep costs under control, according to a survey released Wednesday.

Employers surveyed last month by Towers Watson & Co. expect costs to increase in 2015 by an average of 5.2% prior to design changes and by 4% after design changes.

Those cost increases are comparable to a recent National Business Group on Health survey in which respondents projected costs to increase by average of 5% in 2015 after design changes.

Surveyed respondents, concerned both about keeping costs under control and a health care reform law provision — slated to go into effect in 2018 — that will impose a 40% federal excise tax on health care plan premium costs exceeding certain amounts, are considering a variety of cost control efforts.

For example, just over one-quarter of respondents are considering excluding coverage for employees' spouses or adding spousal premium surcharges if coverage is available elsewhere, such as through the spouse's employer.

In addition, 30% of employers say they are considering, for 2016 and 2017, a defined contribution approach in which they set a fixed amount of how much they would pay toward coverage, an approach that would give employees a financial incentive to choose lower-cost plans.

One approach employers are not considering: dropping coverage and directing employees to public exchanges, with or without an employer premium subsidy. Just over three-quarters of respondents said they were not confident public exchanges would provide a viable coverage alterative for their employees.

Employers taking such an approach also would face a big financial penalty: Under the Patient Protection and Affordable Care Act, they will be slapped with a penalty of $2,000 per full-time employee if they do not offer coverage to their full-time employees, starting next year.

The survey of 379 midsize and large employers, taken in July, also found that while just 17% now offer only account-based health plans — widely known as consumer driven health plans — as their sole plan option, 4% intend to do so next year, and 28% are considering it in 2016 or 2017.

Such arrangements, in which an account is linked to a high-deductible plan, have been growing in popularity because they cost substantially less than more traditional plan designs due to the high deductible.

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