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By Harold Ambler
PBN Contributing Writer
By Harold Ambler
PBN Contributing Writer
(Updated, 11:15 a.m.)
WOBURN, Mass. – Costs paid by Rhode Island employers toward employee health plans in 2013 were higher than costs paid by employers in neighboring states, according to a recent survey conducted by USI Insurance Services.
Health-plan costs to Rhode Island employers averaged $13,153 per employee this year, compared with $12,340 in Connecticut and $10,712 in Massachusetts, USI said in its Dec. 24 release of the survey results.
The survey, conducted for the last 13 years to assess New England employer health and welfare benefits costs, showed that health-plan costs in Rhode Island increased 4.3 percent in 2013, a less significant increase than previous years. Health-plan costs rose 5.7 percent in 2012 and 6 percent in 2011, USI reported.
“Health care trends have slowed in recent years,” said Joseph Fico, USI’s New England regional CEO. “However, preliminary results show a spike for 2014, largely due to the new or increased taxes and fees required under the Affordable Care Act.”
Samuel Slade, USI’s president and practice leader for Rhode Island employee benefits, said in an email that per-employee costs are likely to increase close to 10 percent in 2014. Slade indicated that employers are looking at the big picture when it comes to health care cost containment as a result of the Affordable Care Act.
“We’re seeing companies look for benefit programs that are supported by technical resources, such as compliance attorneys, communications experts, underwriters and wellness directors, as well as a high-touch, consultative model that keeps them updated on mandates coming down the pike,” Slade said.
He added that historically the absence of competition in Rhode Island has generated the highest health insurance costs in the nation, but that competition has increased in the last year.
“HealthSource RI has increased competition,” Slade said. “We now have Neighborhood Health Plan as a commercial option via the SHOP exchange. I hope that HealthSource RI will help to recruit more new plans. We are still among the very worst from a cost perspective. We have richer plans on average, less favorable demographics, more mandated benefits, and less commercial competition, all of which are unhelpful from a cost perspective.”
Health-plan costs to small employers in Rhode Island averaged $11,384 in 2013 compared with $13,280 for large employers.
The survey found that 44 percent of respondents continue to provide financial incentives to encourage employee participation in wellness programs, in an effort to control costs. Employers who utilized an incentive showed the highest average participation rate at 71 percent, compared with the 51 percent average participation among employers who offered no incentive.
Only 1.4 percent of Rhode Island employers said they planned to drop coverage and send employees to purchase insurance through HealthSource RI. Ninety percent of employers will maintain their current employer-sponsored plan, while 8 percent said they do not know.
While 75 percent of Rhode Island employers indicated they do not anticipate making any changes to their existing plans, more than 11 percent said they are considering a switch to income-sensitive contributions to ensure their plans are deemed affordable under the guidelines of the Affordable Care Act. Nine percent of employers said they are looking to change their premium rate tiers, while the remaining 5 percent planned to increase costs for dependent coverage to offset the employee portion of health-plan costs.
Nearly half of respondents – 46 percent – had yet to calculate whether they will be affected by the so-called “Cadillac Tax,” which goes into effect in 2018. The tax will be imposed on the value of health-insurance benefits exceeding a certain threshold – $10,200 for individual coverage and $27,500 for family coverage. The thresholds increase for individuals in high-risk professions and for employers that have a disproportionately older population.
Of the survey respondents who had calculated their exposure to the Cadillac Tax, 35 percent expected to be affected while 16 percent were unsure whether it will impact them or not.
“Given the potential for dramatic (and negative) financial implications for employers who are affected by the Cadillac Tax, we are really surprised at the percentage of respondents who have not done this calculation,” Slade said. “At USI this is a standard element of our ACA impact analysis. For many employers this is a key strategic consideration.”
Founded in 1994, USI is the 10th largest insurance broker in the United States and is headquartered in Valhalla, N.Y.