Employers Scaling Back Health Coverage for Spouses and Dependents
14 November 2014 - 1:05AM
Business Wire
By 2017, 63% of employers will add surcharges or exclude
spouses when health coverage is available elsewhere
To better control rising health care costs and minimize the risk
of triggering the Patient Protection and Affordable Care Act’s
excise tax, over the next three years, a growing number of
employers will make significant changes in how they subsidize
health care coverage for their employees’ spouses and dependents.
This is according to survey data from global professional services
company Towers Watson (NYSE, NASDAQ: TW).
Results from the 2014 Towers Watson Health Care Changes Ahead
Survey, show that by 2017, 63% of employers will add surcharges or
exclude spouses from coverage when employer-sponsored health
coverage is available elsewhere.
“Health care coverage for spouses and dependents is a charged
topic,” said Randall Abbott, a senior consultant for Towers Watson.
“Historically, virtually all large employers have offered and
subsidized it, but it’s expensive. As employers seek to manage
their expenditures, a growing number are rethinking their
willingness to cover a working spouse who has a health benefit
option elsewhere. The emphasis has been on increasing employee
contributions or introducing surcharges, with a small percentage of
employers actually excluding working spouses from coverage
altogether.”
Results from an earlier survey, the 19th Annual Towers
Watson/National Business Group on Health Employer Survey on
Purchasing Value in Health Care, provide more insight into the
specific actions employers are already taking. The survey shows
that in 2014:
- 49% of employers increased employee
contributions for spouse and dependent coverage at a faster rate
than for individual employee coverage.
- 24% implemented spouse coverage
surcharges in 2014 of about $100 per month or more when other
coverage was available to the spouse. These surcharges increased
the cost of spouse coverage for employees by $1,200 a year, on
average, and at the high end, by more than $2,000 a year.
- 2% offered no subsidy at all for spouse
coverage.
“These subsidy changes and surcharge levies are just some of the
many changes employers continue to make to control costs,” said
Abbott. “The overall goal is to manage costs and derive greater
value for each dollar spent while also improving worker health,
quality of care and health outcomes. The challenge for employers is
that there is no single solution; rather, they must look across all
program dimensions.”
ABOUT THE SURVEYS
The 2014 Towers Watson Health Care Changes Ahead Survey offers
insights into the focus and timing of U.S. employers’ plans and
perspectives related to their health benefits, and their efforts to
better manage costs and employee engagement, as well as their
planned responses to the business risks associated with the 2018
excise tax. The survey was completed during July 2014 by 379
employee benefit professionals from midsize to large companies
across a variety of industries and reflects respondents’ 2014 –
2017 health care benefit decisions. The responding companies
comprise a broad range of industries and business sizes, and
collectively employ 8.7 million employees.
The 19th Annual Towers Watson/National Business Group on Health
Employer Survey on Purchasing Value in Health Care tracks
employers’ strategies and practices, and the results of their
efforts to provide and manage health benefits for their workforce.
This report identifies the actions of high-performing companies, as
well as current trends in the health care benefit programs of U.S.
employers with at least 1,000 employees. The survey was completed
by 595 employers between November 2013 and January 2014.
Respondents collectively employ 11.3 million full-time employees,
have 7.8 million employees enrolled in their health care programs
and represent all major industry sectors.
ABOUT TOWERS WATSON
Towers Watson (NYSE, NASDAQ: TW) is a leading global
professional services company that helps organizations improve
performance through effective people, risk and financial
management. With 15,000 associates around the world, the company
offers consulting, technology and solutions in the areas of
benefits, talent management, rewards, and risk and capital
management. Learn more at towerswatson.com.
Towers WatsonRob Wyse, +1
212-920-1470rob@capital-content.com
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