Employers Raise Worker Deductibles

As health care costs increase, four out of five U.S. companies hike deductibles or are considering doing so.

Four of five U.S. companies have raised deductibles or are considering doing so as health costs increase, according to a survey of more than 700 employers.

About one-third of the companies have already increased deductibles or other cost-sharing provisions like copays, and 48 percent are considering similar moves, the survey by New York-based consulting firm Mercer LLC found.

Employers are looking for ways to trim expenses as health-care costs continue to rise and the Patient Protection and Affordable Care Act increases the benefits that are required. United Parcel Service Inc. dropped coverage for employed spouses and Home Depot Inc. sent 20,000 part-time workers to government-sponsored insurance websites.

Almost four of five companies surveyed in January said they had significant or very significant concerns over higher administrative burdens, and 62 percent had concerns related to the so-called Cadillac tax on the most expensive plans.

The tax is a provision of the Affordable Care Act aimed at businesses with generous health benefits. Employers with benefits exceeding $10,200 for individuals and $27,500 for families will be taxed 40 percent starting in 2018, on the theory that overly generous plans boost medical costs.

Almost one in five employers have already dropped the plans, according to the survey, and another 33 percent are considering dropping the coverage. Employers are turning instead to private exchanges, or consumer-directed health plans, which give employees personal health-care accounts.

About 8 percent of employers have, like UPS, dropped coverage for spouses who have other coverage available, and another 11 percent are considering doing so for 2015, the survey said.

 

Bloomberg News

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