Scott Benefit Services 2013 Mid-Market Benefits Survey: 42% of Employers Say Health Care Costs Increased 3% or More in 2013 Due to the Affordable Care Act

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Over 200 mid-market employers in the Virginia and North Carolina area and more than 5,000 employers nationally participating in the survey reported significant changes in the health care landscape due to the Affordable Health Care Act.

72% of participating employers in Virginia and 80% of participating employers in North Carolina are forecasting a price impact from the Affordable Care Act.

72% of mid-sized employers nationally say health care costs increased from 1% to greater than 10% over last year due to the Affordable Care Act (ACA) as reported in Scott Benefit Services’ recently released 2013 Mid-Market Benefits Benchmarking Survey results. Regionally, 72% of participating employers in Virginia and 80% of participating employers in North Carolina are also forecasting a price impact from ACA.

Although the majority of employers participating in the survey responded that health care costs are increasing 3% or more due to ACA, only 25% of Virginia companies and 16% of North Carolina companies have completed a formal analysis to assess the impact.

“Even though the mandate enforcing penalties for companies not offering health care has been delayed until 2015, additional taxes and other fees will still be collected in 2013. This will result in increased health care costs,” explained Josh McGee, Vice President of Health Risk Performance for Scott Insurance. “It is important for companies to define strategies now to manage future challenges.”

The survey also revealed other significant changes to the health care landscape in response to ACA including: plan design change, consumer driven health plans and wellness programs.

Plan Design Change
As health care costs continue to grow, the survey trend shows that participating employers will manage the rising expense through decreasing the value of their benefit plan design change and increasing employee payroll contribution:

  •     70% in Virginia and 76% in North Carolina are considering plan design changes
  •     42% in Virginia and 38% in North Carolina will charge dependent tiers more in contribution amounts

“Employers continue to look for ways to offset continued high levels of medical inflation coupled with increased costs due to ACA taxes and fees,” noted McGee. “ The simplest solution for employers continues to be to share and pass those increasing costs on to their employees in the form of reduced benefits plan values and increased payroll deduction.”

Consumer Driven Health Plans (CDHP)
CDHPs have entered the market and continue to take on a larger role as companies develop plans to meet the minimum value standard. CDHP is a tiered health care plan that allows members to pay routine health care costs using a health savings accounts or similar payment product versus a fixed health insurance benefit.

By 2008, 15% of employers nationally offered a CDHP. In 2012 this number climbed to 23%. Virginia and North Carolina rank high in the nation compared to other states in CDHP participation.

  •     In Virginia, 34% of participating employers are currently offering CDHPs and 23% are looking into offering a CDHP in the future.
  •     North Carolina follows closely behind with 32% of participating employers currently offering CDHPs and 20% considering offering them in the future.

Survey data illustrates that employer wellness programs are becoming increasingly popular as ACA creates new incentives to encourage employers to offer opportunities supporting healthier workplaces. In Virginia, over 50% of participating employers offer some type of wellness program, as do more than 40% of employers in North Carolina. The most popular offerings include Employee Assistance Programs, wellness newsletters and smoking cessation programs.

Although ACA is a big driver for wellness programs, many employers are creating wellness opportunities to help their workforce. 68% of Virginia employers and 75% of North Carolina employers offer wellness programs to improve the health of their employees as well as to improve employee morale and productivity.

“On the surface new regulatory requirements under ACA are changing how employers attempt to incent employees and even dependent health behavior. Employers should be cognizant of the fact that these regulations do not and should not define the core strategy for a wellness program within their organization, otherwise the true business value for why we deploy such strategy is lost,” explained Dina Fonzone, Vice President of Health Risk Management at Scott Insurance.

About Scott Benefit Services’ Mid-Market Benefits Benchmarking Survey
For the ninth year, Scott Benefit Services has offered its annual mid-market benefits survey with the help of a highly respected actuarial consulting firm. The survey provides customized benchmarking data for mid-market size companies’ benefit plans (50 – 1,000 employees) on both a regional and national level. It is the largest benefits survey of its kind in the U.S. with over 200 mid-market Virginia and North Carolina area companies participated and more than 5,000 companies nationally.

About Scott Insurance
Scott Insurance is Virginia’s oldest and largest employee-owned provider of Risk Management, Benefit Services, Bonds, and Financial Management. The company has offices in Lynchburg, Roanoke, and Richmond, Virginia; Greensboro, Raleigh and Charlotte, North Carolina; and Knoxville and Nashville, Tennessee, as well as Captive Insurance operations in the Grand Cayman.

SOURCE: 2013 Scott Benefit Services Mid-Market Benefits Benchmarking Survey;

Scott Insurance, 1301 Old Graves Mill Road, Lynchburg, VA 24502

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Sallie Anthony