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2012 Open Enrollment to Feature Higher Employee Premiums, New Hurdles for Incentives, Fewer Plan Options


September 7, 2011 (SmartPros) With open enrollment season about to begin, many employers remain committed to providing employee health care benefits. However, they will continue to shift costs to employees, consolidate plan choices, emphasize account-based plans and require employees to do more in order to receive incentives, according to experts at Towers Watson.



With open enrollment season about to begin, many employers remain committed to providing employee health care benefits. However, they will continue to shift costs to employees, consolidate plan choices, emphasize account-based plans and require employees to do more in order to receive incentives, according to experts at Towers Watson (NYSE, NASDAQ: TW), a global professional services company.

“Unlike the last few years when many employees saw significant increases in copayments, deductibles and coinsurance, 2012 looks like a year when we will start to see costs go up primarily via increased premium contributions, with a higher proportion of the increase being borne by families,” said Randall Abbott, senior health care consultant at Towers Watson. “Employers are becoming increasingly focused on raising the cost for dependents to capture the added expense and to encourage working spouses to shift to their own employer’s plan. We also expect more use of spousal surcharges when they fail to do so.”

The 2011 Towers Watson Health Care Trend Survey, released in late August, found that the annual cost of medical and pharmacy coverage would increase to $11,204 per employee for active coverage in 2012 (an increase of 5.9% versus 7.6% for 2011). According to the survey, roughly two-thirds of employers (66%) will increase employees’ share-of-premium contributions for single-only coverage for 2012, and 73% will increase them for dependent coverage.

“Most employees can expect only nominal point-of-care cost increases in 2012 except for those migrating to account-based plans, who might see lower premium costs but assume a greater share of costs in the form of higher deductibles,” said Abbott.

Employers continue to consolidate plan choices and are adopting account-based plans at a rapid rate, with 57% of large employers expecting to offer this option. This means employees will need to become more familiar with the advantages and certain limitations of high-deductible plans and health savings accounts. Employees will also be required to pay more for brand-name drugs, and will have access to specialty drugs only with prior authorization and participation in other therapies.

“We expect to see continued changes in the prescription drug arena, with employers encouraging even greater use of generics and implementing more rules around prior authorization of certain drugs,” noted Nadina Rosier, national pharmacy director at Towers Watson. “Employees may also find increased copayment differences between generics and brand-name drugs as employers seek to encourage patients to take advantage of several blockbuster drugs coming off patent in the coming months.”

Incentives to participate in wellness programs, or awards to complete a personal health assessment or be screened for high blood pressure, cholesterol, blood sugar and other items continue to be popular, but employees will need to do more to get the same level of incentive awards. A small but growing number of employers are requiring both health assessments and biometric screenings as a condition of plan participation. In other cases, those declining to undergo screenings face a higher premium or more limited plan choices.

“Employers will keep their focus on improving worker health and driving employees to consider the cost of care in 2012. As a result, we expect more companies to link benefits with individual employee behaviors and benefit decisions, requiring employees to be more accountable for their own choices,” noted Abbott. “Employees who make smart decisions about their health care providers and prescription medications will be able to boost employer subsidies and incentives.”

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2011 SmartPros Ltd. All rights reserved.

Source: Towers Watson

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