There’s plenty of talk surrounding health care
reform and whether employers should “pay or play.” The popular phrase refers to
a business’s choice to either offer health care benefits that meet the law’s
standards or yield to fines for dropping coverage. Though savvy employers know
their benefits package can help boost workplace retention, satisfaction and
productivity, many are faced with a difficult decision as health care costs
continue to rise. What if there was a way for employers to play differently? By
understanding rising costs, employers can take advantage of key solutions and
take control of their employee benefits options.
When it comes to benefits, employers
face an imperative choice
In the current health care system with rising
health care costs, employers facing the “pay or play” decision can:
- Stay the course: Keep group health insurance
and pay inevitable annual renewal rates, while looking for options to keep
costs down through employee cost.
- Pay and exit: Drop group health insurance and
all employer-sponsored health benefits and pay the penalty. Employers with 100
or more full-time equivalent employees can choose to pay applicable tax
penalties, and employers of all sizes who exit from offering health insurance
may “pay” with difficulty in recruitment and retention.
- Play differently: Choose a different course of
action to allow their company to provide health care options the workforce
needs while also minimizing health care costs.
4 ways employers can play differently
Employers who want to have greater control of
their benefits options have several alternatives. Companies may choose one
strategy or a combination to fit their workforce and their budgets.
Consider discussing the following four
strategies with your benefits consultant:
1. Employer-sponsored account-based health
plans: An account-based health plan is a consumer-directed strategy that can
pair a choice of group health insurance plans with a tax-advantaged medical
spending account. Options include:
- Health Savings Account (HSA) – HSAs are
individual bank accounts owned by employees that allow tax-free medical expense
reimbursement. It’s required to be paired with a high-deductible health plan.
- Health Reimbursement Arrangement (HRA) – An
HRA is an employer-funded, tax-advantaged employer health benefit plan that
reimburses employees for out-of-pocket medical expenses.
- Health Flexible Spending Account (FSA) –
Health FSAs offer a tax-free way for employees to save for qualified medical
expenses during a single year. FSAs can be paired with any health plan or used
- Health Incentive Account (HIA) – HIAs are
designed for the employee to solely earn funding for out-of-pocket health care
expenses by participating in and completing a health rewards program.
2. Private and public exchanges: Health
insurance exchanges (also called marketplaces) are web portals where
individuals and businesses can shop for and buy health insurance. They’re
gaining popularity and can make benefits administration easier for businesses.
Plus, they give employees the option to purchase health care coverage that fits
their needs and their budget. Regardless of your company’s size, private
exchanges can help your company offer a variety of benefits options, including
major medical and voluntary products. And if your company has fewer than 25
full-time equivalent (FTE) employees, you may be able to take advantage of tax
credits through a government exchange option called the Small Business Health
Options Program (SHOP).
3. Voluntary insurance: Another way employers
can help provide an extra layer of financial benefits protection and a broader
benefits package to their employees is by adding voluntary benefits to their
employees’ benefits package. Unlike major medical insurance, voluntary policies
pay cash benefits directly to the policyholder (unless assigned otherwise) if they
get sick or injured. Research shows that employees who are offered and enrolled
in voluntary benefits by their employer are more likely to say their current
benefits package meets their family’s needs extremely or very well than those
who aren’t offered voluntary benefits through their employer.*
4. Outcomes-based initiatives: Companies are
beginning to establish ways to keep providers and employees accountable for
health outcomes. For providers, employers can look to bundled pricing
arrangements with their insurer so employees get the best rates with doctors
and hospitals with proven track records for success. For employees, companies
are increasingly looking to health screenings and incentives.
In 2015, 16 percent of businesses expected to
introduce health care incentives, and more than 3 in 5 (64 percent) of
businesses with wellness programs include a wellness screening component.*
Build a road to compliance that works
for your business
Although every business and workforce is
different, the importance of having employees who are adequately protected by
their health care coverage is increasingly a constant. Savvy leaders find a way
for their businesses to succeed and build a health benefits package that meets
their employees’ needs while actively controlling rising health care costs. New
innovations in the health care market and trusted consumer-directed strategies
can help employers to play differently.
More benefits strategies and resources
for small businesses
The Employer’s guide to healthcare reform helps answer important questions facing small
businesses and offers solutions to help strike the right benefits balance — one
that is budget friendly while also meeting the health care needs and
requirements of employees.
* The 2015 Aflac WorkForces Report, conducted on behalf of Aflac in
January 2015 by Research Now, captured responses from 1,977 benefits
decision-makers and 5,337 employees from across the United States. To learn
more about the Aflac WorkForces Report, visit AflacWorkForcesReport.com.