By Casey Kirkeby, Strategy Consultant
Employer-sponsored health benefits have faced several threats over the past few decades, but just like hard-working employees they protect, they still endure and remain the primary method of coverage today.
One of the most impactful changes has been the introduction the Affordable Care Act (ACA). The Employee Benefits Research Institute (EBRI) recently published a report examining the ACA’s impact and other government health care solutions on employer-sponsored health plans. The study interviewed 26 benefits executives from various industries whose organizations covered over 1.2 million individuals and spent more than $6.5 billion on benefits in 2021. Their data reflected that both employers and employees still viewed employer-sponsored health benefits as an important feature of the employment relationship. Who would have though, right?! While this public option doesn’t guarantee ongoing success and stability, it will hopefully help shield employers from future challenges like legislative policy changes, economic difficulties and labor market shortages. Just like any good relationship, the employer/employee benefit relationship takes hard work, trust, and transparency.
As health care costs rise, employers are looking at any option to control costs. One arrangement that has been quite popular in the Lower 48 is the ICHRA (Individual Coverage Health Reimbursement Arrangement). Since it’s inception in January of 2022, many employers have adopted the ICHRA, directing their employees to private exchanges so that the employee is able to make plan design decisions for themselves apart from the traditional one-size-fits-all model. There are important considerations to take into account before an employer jumps to this model and the process is still clunky, but it can be a good fit for some employers. However, employers and employees have been slow to embrace the ICHRA because it lacks control over healthcare costs and creates additional administrative burdens that the employer has to absorb.
Another survey conducted by the National Business Group on Health concluded that most employers plan to continue offering health benefits to their employees as part of their overall compensation package. Specifically, the survey found that 92% of large employers offer health benefits and expect to continue doing so in the future, with an increasing focus on virtual health and digital solutions.
Employers are always exploring different ways to control costs, such as offering high-deductible health plans, Wellness Programs, Employee Assistance Programs surrounding mental health, and incentivizing employees to use cost-effective providers. But for now, employers remain confident in their ability to provide affordable health benefits to employees as an important attraction and retention tool.