TROY — According to the findings of McGraw Wentworth’s 2013 Southeast Michigan Mid-Market Group Benefits Survey, midsize employers are making moderate health plan changes, keeping cost increases to 4 percent, the lowest rate in 10 years.
The 10th annual survey benchmarks health benefits and cost trends for the current year — including key decisions pertaining to health reform — among 440 Southeast Michigan-based organizations with 100-10,000 employees.
“In line with national trend, Michigan employer health care costs are rising at an average of 4 percent after plan changes, down from 6 percent in 2012,” says Rebecca McLaughlan, managing director, McGraw Wentworth. “Employers are using strategies such as wellness, consumer driven health plans, spousal and tobacco use surcharges, and prescription cost management to control their costs. Talent management is top of mind for employers, with 91 percent of the survey participants indicating they plan to continue offering health benefits to full time employees under health reform.”
Key findings of the survey included:
Michigan employer health care costs are rising at an average of 4 percent after plan changes, down from 6 percent in 2012 and on par with national trend of 4.1 percent. This is also the lowest increase recorded by survey since its introduction in 2004. Also, for the second consecutive year, 25 percent of participants report no cost increase at all.
More local employers are using spousal eligibility limitations to manage costs. Some 59 percent of employees elect dependent coverage for spouse or children. Compared to 12 percent of employers nationally, 30 percent of Michigan employers require a surcharge or exclude spouses who are eligible for coverage from other sources.
Wellness plans continue to evolve, with 36 percent of employers tying incentives to achievement of a health goal, known as “outcomes based” wellness plans. Additionally, 60 percent of employers indicated they are planning to move in this direction within 12 to 24 months.
When employers offer wellness plans, an increasing number – 45 percent, up from 41 percent in 2012 — are including both employees and spouses, and in many cases children.
Tobacco use remains a target for cost management. Eleven percent of southeast Michigan employers charge a tobacco surcharge at an average of $46 per month.
The survey cites 96 top-performing organizations, both union and non-union, as TrendBenders that successfully kept their two-year average benefit cost increases at or below zero. TrendBender organizations are keeping costs flat using more aggressive plan designs — higher emergency room copays, tiered prescription cost sharing, CDHPs as the only plan option — and proactive wellness tactics such as biometric screening.
Tracking trends pertaining to health reform, the survey shows:
91 percent of Michigan employers plan to offer health care coverage to full time employees in 2014 and 2015, rather than pay the penalties entailed in discontinuing coverage. This is an increase from 85 percent in 2012.
41 percent of survey participants do not currently offer coverage to employees working 30 hours or more per week. In 2014, 57 percent of these organizations intend to extend coverage to all qualified employees while 34 percent plan to reduce work hours. The primary reason given for continuing to offer employer-sponsored insurance is retention and recruiting. Discontinuing benefits would also be contrary to most employers’ corporate culture.
“As employers examine both the talent management and cost impact of discontinuing benefits, many are finding other strategies and tactics for managing health care cost trend. This survey provides HR and financial professionals with objective, local market insight to help them evaluate their options for 2014,” says Katy O’Brien, account director with McGraw Wentworth and survey leader.
The McGraw Wentworth Mid-Market Group Benefits Survey is the largest of its kind with 537 mid-sized employers participating including 440 southeast Michigan organizations. Results for municipalities and school districts are analyzed separately. 81 percent of respondents are returning year-over-year participants. Respondents represent diverse industries with 26 percent self-identified as auto suppliers and 30 percemt with union employees. The survey has a 4 percent margin of error.
Sponsored by McGraw Wentworth, survey results are shared with participants in May and June. For information, contact Ryan Bowers at (248) 822-62