Although the rate of health care cost increases is expected to remain stable in 2012, employers are taking more aggressive steps to manage their rising costs and improve employee health, according to findings from the 2012 Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care. The survey was completed by 512 employers who work at companies with at least 1,000 employees and collectively employ 9.1 million full-time employees, and represent more than $87 billion in annual health care spending.
The survey found that total health care costs per employee are expected to rise 5.9% to $11,664 in 2012, compared to 5.4% ($10,982) in 2011. Employees’ share of costs increased 9.3% during this period to $2,764. This amount represents a 40% increase in costs from just five years ago, compared to a 34% increase for employers over the same time period. Retirees not yet eligible for Medicare can expect to pay an average of $4,226 per year for single only coverage and $10,500 for family coverage.
Many employers plan to make substantial changes to their health care benefits offerings because of these rising costs. Four in 10 employers say that developing a workforce culture where employees are accountable for their own health is a top health care strategy focus in 2013. One in four employers say the same about reviewing their overall mix of benefits. Many employers are also keeping their eye on staying up to date and complying with the Patient Protection and Affordable Care Act (34%).
“As employers try to maintain the balance between containing costs and offering competitive total rewards packages, they are realizing that their future health care benefits choices are not quite as simple as ‘paying or playing,’” says Ron Fontanetta, senior health care consulting leader at Towers Watson. “In fact, there is a wide spectrum of design choices that will allow employers to develop a health care strategy that matches their unique objectives and workforce demographics.”
The options, which range from continuing to discontinuing health plan sponsorship, include offering an employer-sponsored plan to only a portion of the population and providing employees with a defined contribution for use in health insurance exchanges. According to the survey, only 3% of employers are very to somewhat likely that they will discontinue health care plans for active employees in 2014 or 2015 without providing a financial subsidy. By the same measure, 45% of employers are very to somewhat likely that they will offer coverage to only a portion of their workforce and direct the others to exchanges.
While most employers will remain focused on sponsoring the design and delivery of their health care programs through 2015 (77%), they are much less confident that health care benefits will be offered at their organization over the longer term. Less than one in four (23%) companies are very confident that they will continue to offer health care benefits 10 years from now, down from a peak of 73% in 2007.
Companies today are continuing to expand their use of financial rewards to engage employees and their spouses to better manage their health. In fact, more than two-thirds of respondents offer incentives today. Respondents also indicated that they have become more willing to add penalties to their arsenal (used by 20% today), and some (10%) have even adopted achievement standards, which will likely continue to grow in use as companies increasingly hold employees accountable for unhealthy life choices, losing weight and lowering blood pressure.
Sunday, March 25, 2012
Building a Culture of Health
Building a culture of health at any organization can be challenging, but developing a supportive workplace not only stunts escalating health care costs, positive tactics engage employees and guide them to make healthy decisions. A health director from Dow Chemical shared how leadership buy-in and individual accountability thrust her company toward a healthy culture in a webinar presentation yesterday by the Change Agent Workgroup (CAWG) and facilitated by the International Foundation of Employee Benefit Plans.
"[The health outreach] has to be real," Dr Catherine Baase, global director of health services, The Dow Chemical Company, explained. She said that every initiative needs integrity. "If it's just words on a page, the program isn't delivering value to people."
Every culture of health must be fed from the bottom up, as well as the top down, which is why leadership buy-in is critical, said Baase.
"Start building a business case by [presenting] information that is concrete and credible that illustrates the value proposition to the organization," she advised HR professionals looking to pitch a comprehensive health program to the executive team. Data on how such initiatives will retain employees and attract new talent goes a long way in solidifying leadership support, she said.
A vision of health "needs to be perceived as a priority business asset and has to be recognized as having a big and important impact on the ultimate success of the enterprise. It has to be viewed a critical to the strategy of the organization," said Baase.
However, not all organizations have defined a healthy culture in such strong corporate terms. Only 31% of respondents to Aon Hewitt’s 2012 Health Care Survey have active wellness councils or champion networks that meet regularly, with 13% adding such a group in 2012. This was the most popular health tactic present in over 1,800 individual employer-provided health benefits considered in the survey.
"[The health outreach] has to be real," Dr Catherine Baase, global director of health services, The Dow Chemical Company, explained. She said that every initiative needs integrity. "If it's just words on a page, the program isn't delivering value to people."
Every culture of health must be fed from the bottom up, as well as the top down, which is why leadership buy-in is critical, said Baase.
"Start building a business case by [presenting] information that is concrete and credible that illustrates the value proposition to the organization," she advised HR professionals looking to pitch a comprehensive health program to the executive team. Data on how such initiatives will retain employees and attract new talent goes a long way in solidifying leadership support, she said.
A vision of health "needs to be perceived as a priority business asset and has to be recognized as having a big and important impact on the ultimate success of the enterprise. It has to be viewed a critical to the strategy of the organization," said Baase.
However, not all organizations have defined a healthy culture in such strong corporate terms. Only 31% of respondents to Aon Hewitt’s 2012 Health Care Survey have active wellness councils or champion networks that meet regularly, with 13% adding such a group in 2012. This was the most popular health tactic present in over 1,800 individual employer-provided health benefits considered in the survey.
Sunday, March 11, 2012
Health Care Tax Deduction
As medical costs go up and household income lags behind, more people are likely to qualify for health care tax deductions.
A recent Census report shows a decline in median household income; real median household income was $49,445 in 2010, 7.1% below its 1999 peak of $53,252.)
Indeed, in 2009 (the latest year for which data is available), health care tax deductions were the only itemized deduction that grew, rising nearly 5% from the previous year to a total of $79.9 billion, according to Internal Revenue Service data. The amount has probably gone up since then.
To qualify for a health care tax deduction, you need to spend more than 7.5% of your adjusted gross income on health costs, as only the expenses above that threshold can be deducted. The U.S. Census has reported that real median household income in 2010 was still below its 1999 peak, so the combination of rising costs and lower incomes could produce more qualifying deductions.
If your out-of-pocket medical costs rose last year, or your income fell, it's certainly worth sorting through all your receipts to see if you qualify, even if you never did before.
You might discover that you've been pushed over the limit by a new baby, or simply because you're facing higher deductibles and co-payments in your insurance plan.
"People are cavalier about thinking about medical expenses, because not many people spend over 7.5% of income... (on health care), but with incomes reduced, more and more people may qualify," says Bob Meighan, a TurboTax vice president and certified public accountant. "It is time to reevaluate."
Some 10 million taxpayers claim this deduction, for an average of $7,915 each. If you make $100,000 and spend $10,000 on medical care, you'd get a deduction of $2,500, worth $700 in the 28-percent tax bracket.
A recent Census report shows a decline in median household income; real median household income was $49,445 in 2010, 7.1% below its 1999 peak of $53,252.)
Indeed, in 2009 (the latest year for which data is available), health care tax deductions were the only itemized deduction that grew, rising nearly 5% from the previous year to a total of $79.9 billion, according to Internal Revenue Service data. The amount has probably gone up since then.
To qualify for a health care tax deduction, you need to spend more than 7.5% of your adjusted gross income on health costs, as only the expenses above that threshold can be deducted. The U.S. Census has reported that real median household income in 2010 was still below its 1999 peak, so the combination of rising costs and lower incomes could produce more qualifying deductions.
If your out-of-pocket medical costs rose last year, or your income fell, it's certainly worth sorting through all your receipts to see if you qualify, even if you never did before.
You might discover that you've been pushed over the limit by a new baby, or simply because you're facing higher deductibles and co-payments in your insurance plan.
"People are cavalier about thinking about medical expenses, because not many people spend over 7.5% of income... (on health care), but with incomes reduced, more and more people may qualify," says Bob Meighan, a TurboTax vice president and certified public accountant. "It is time to reevaluate."
Some 10 million taxpayers claim this deduction, for an average of $7,915 each. If you make $100,000 and spend $10,000 on medical care, you'd get a deduction of $2,500, worth $700 in the 28-percent tax bracket.
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