The implementation of the Patient Protection and Affordable Care Act (PPACA) is likely to trigger change in a medical insurance landscape that, until now, has been dominated by employer-sponsored plans. But plan sponsors are not sitting pat. Many either have implemented, or plan to activate, alterations to their existing medical plans, largely to avoid an excise tax on plans that exceed a cost threshold established by the federal government. The tax is scheduled to take effect in 2018.
What’s on the Table
Although the vast majority of plan sponsors that responded to a recent survey expect to make only minor modifications for the next two or three years, a more forward-looking group is taking bolder action focused on coverage for retirees, pharmacy spend, assessment of employee health risks, and financial subsidies in lieu of insurance coverage.1
- More than half expect to discontinue an employer-sponsored plan for retirees and have increased employees’ share of costs for use of brand drugs when a generic is available.
- 70% have offered financial incentives for individuals who complete a health risk appraisal or participate in a health management program.
- 60% anticipate replacing health plans with a financial subsidy for employees working more than 30 hours a week.
Impact on Sponsors, Participants
These changes are likely to take effect at a time when both plan sponsors and American workers are experiencing many stressors that are outside of their control.
- Controlling corporate medical costs may be an essential component of risk management at a time when many organizations are buffeted by higher costs for pensions and other employee benefits.
- More than four million baby boomers between the ages of 55 and 64 are not able to find full-time work, typically a precursor to getting health insurance.2 Because these individuals are too young to qualify for Medicare, they may have considerable difficulty obtaining health insurance on their own.
- For those old enough to qualify for Medicare, monthly premiums are required and certain costs, such as long-term care, are not covered.
- Health care costs are significant even for younger households. The Kaiser Family Foundation has indicated that households currently are paying more than $4,000 annually for premiums on employer-sponsored coverage. This amount does not include co-payments and other out-of-pocket costs.3
There is no easy solution to the health care challenges that the United States faces. In the years ahead, both plan sponsors and their participants will be required to adjust to a changing landscape as modifications in medical coverage become a way of life.
