If you're thinking of making changes to your employees' health plans in anticipation of the 2018 "Cadillac Tax" imposed by the Patient Protection and Affordable Care Act (ACA), you're not alone. The recently-released fifth annual Medical Plan Trends Report from HighRoads and CEB reveals that many employers, in an effort to avoid the Cadillac Tax, are scaling back on their medical plans, resulting in an increasing share of costs for employees. Such increased costs for American workers include more high-deductible plans, a greater number of plans with coinsurance charges, higher out-of-pocket maximums, and increases in emergency room co-pays. HighRoads is a benefits plan management and health care compliance company, and CEB is a leading member-based advisory company.
The Cadillac Tax is a 40% excise tax that will be imposed by the ACA in 2018 on plans with premiums over $10,200 for an individual and $27,500 for a family (indexed for inflation). The 2014 report from HighRoads and CEB shows that companies are starting to evolve their benefits plans to prepare for this requirement.
The report shows a steady increase in the number of medical plans with individual, in-network out-of-pocket maximums (OOPMs) of $2,500 or more. In 2014, 2/3 of plans have OOPMs of at least $2,500. In 2013, it was 58%, and in 2012, it was 49%. The percentage of plans with high deductibles grew by three percent in 2014 from 23% to 25%.
Also, more plans charge coinsurance for office visits, up to 42% in 2014, from 35% in 2013. Emergency room (ER) And average costs for visits to the ER have been rising slightly, about $3 per year since 2009, with a 2014 average of $113 per visit.
Not all of the trends attributable to the ACA are negative, however. HighRoads and CEB found that there appears to be more generous coverage for mental health, with the average co-pay for an inpatient mental health visit dropping by three percent from 2013 to 2014. There is also greater free preventive coverage, with nearly all 2014 plans covering 100% of patient costs for in-network cancer screenings, immunizations and other preventive services.
"The employer-sponsored medical plan landscape continues to shift in response to the ACA and, as a result, it’s more important than ever for employers to effectively communicate plan changes to their employees," said Cynthia Weidner, vice president, client development, HighRoads. "It’s evident that companies are embracing typical health plan consumerism strategies that encourage a more thoughtful, cost-effective use of medical benefits by exposing plan participants to more of the upfront costs. With plan designs changing and the emergence of new options including both public and private exchanges, benefits management professionals should be armed with the information employees need to make informed decisions on plan choices and efficient benefits usage."
"Our research shows that the changing face of health care plan design will continue to evolve as employers work to meet ACA requirements while avoiding added tax penalties by 2018," said Laura Arpin, Associate Director, Corporate Executive Board. "But, employers must recognize how these changes may be reflected in the health care behaviors of their plan participants. Without strategic communication processes in place on the best practices for utilizing health plan benefits, plan participants may be more apt to delay necessary care due to the uncertainty of its actual cost. By making sure plan participants have cost information, employers can reduce the likelihood of their employees and employee families delaying or rationing care by as much as 50 percent."
To receive a copy of the 2014 Medical Plan Trends Report by HighRoads and CEB, please visit: http://www.highroads.com/resources/