According to the Kaiser Foundation, annual premiums for employer-sponsored family health coverage topped $17,000 in 2015, up 4 percent from last year. Workers payed an average of nearly $5,000 toward their coverage. Will this upward trend continue?
As we near the end of 2015 and look towards 2016, you are probably wondering where these costs are going to go and what that means for you and your business. In this article, we’re going to discuss the U.S. health insurance outlook and trends for 2016.
Slower Growth in Health Costs in 2016
Forbes tells us that while costs won’t fall next year, we should expect slow growth in 2016. They report that if you make no changes to your workers’ health insurance benefits in 2016, your costs will rise about 6.4%. They go on to say they’ll increase just over 4% if you raise deductibles, co-pays and negotiate a better deal with your insurance company.
Why the slow growth in costs? One reason is that health benefits experts say the new high-deductible plans ushered in with the Affordable Care Act prompt workers to shop wiser and opt for generic drugs. The high deductible also sends employees to the doctor only when they most need it. Employees shop around for less expensive MRIs and opt for phone calls instead of doctor’s visits.
Additionally, many employers will add high-deductive plan options in 2016 as they see the benefits to promoting cost-conscious spending among their employees. This will hold their premiums down.
Costs Increase for Prescription Drugs in 2016
You’ll see prescription drug coverage hit double-digit rates. The Segal Health Plan Cost Survey found that prescription drug costs are due to rise 11.3% for employees and retirees under age 65 and 10.9% for retirees age 65 and over. Specialty drug costs are expected to remain very high at nearly 19%.
Investments in Employee Health
Expect more employers to begin programs that invest in their employee’s health in 2016. These investments pay off in medical plan savings, keeping premium costs lower.
Services employers are offering include on-site workout facilities, time for daily exercise, on-site yoga or exercise classes, massage for stress management, a healthy menu in their cafeteria, weight loss programs and more.
One of the main issues to pay attention to is ACA compliance. You might be worried about the new 1095 and 1094 forms required by the IRS.
Here are a few things to remember when it comes to ACA compliance:
- Compliance and filing requirements are based on having 50+ full-time employees. Employees working 30 hours a week are considered full time.
- You must track part-time employees because they can add up to full-time employees.
- You must offer affordable health insurance
- You must create and submit the 1094-C, 1095_C and the Written Statement to each employee.
The deadline for ACA Compliance is January 31, 2016.
Preparation for the Cadillac Tax
Employers will need to focus on decreasing health care spending in 2016 before the Affordable Care Act’s 40% excise tax on high cost health plans goes into effect in 2018. You’ll need to make projections now to determine if your plan will be subject to the excise tax.
As 2016 approaches, the trend for health care costs will continue to outrun wage increases and overall consumer price inflation. Lower utilization rates for medical needs may keep costs at an acceptable rate, but price inflation for treatments may cause problems for your insurance costs.
You’ll face challenges as you move through 2016 to administer costs. Here are a few ways to keep them at a manageable rate:
- Review your data and evaluate the performance of your health plans.
- Manage the use of specialty drugs. Some cost management options include requiring prior authorization and mandating a limited network of specialty pharmacies.
- Get proposals from more than one company.
- Debate the value of custom or narrower provider networks. You may see lower costs with higher quality, smaller physician groups. Consider the value of less choice for your employees.
- Use a cafeteria style approach.
With improved management of your company’s health plan and an investment in healthy lifestyle offerings, you may see better long-term results when it comes to your businesses’ health insurance.
Whether your startup is already offering health insurance or just thinking about, we are here for you. We can help answer your questions and guide you through the process. Outsource your finances, payroll, HR duties and more to us. Contact Escalon today to get started.
Image: 401(K) 2012