Recession Changing Benefits Design, Usage

Employers and employees are making changes to the way health care plans are designed and used as a result of the recession, according to a survey by the International Foundation of Employee Benefit Plans released Friday, April 17.

Employers are looking to cut costs and employees are looking to save money while they still have the benefits available to them, according to the Brookfield, Wisconsin-based IFEBP, which surveyed plan sponsors across a number of employee benefit sectors, including corporate plans, public/governmental plans and multiemployer benefit plans, or labor unions.

The majority of respondents—76 percent—said their greatest concern is that the recession will cause the need for greater participant cost sharing. About 62.6 percent of those who responded said participant benefits may be reduced, with nearly 72 percent of multiemployer plan sponsors reporting that as a top concern.

According to the survey, completed this month, 35 percent of the 1,300 plan sponsors responding have increased their deductibles, co-insurance, co-pays or premiums for active workers as a result of the economic crisis. About 22 percent of the respondents have increased co-insurance and co-pays for drug costs for active workers.

Further, one in five plan sponsors said they have either implemented or are considering increases to retirees’ health care premiums, deductibles and co-pays due to the financial crisis.

“The financial crisis has led some to conclude that health care and the economy are inextricably linked. You can’t separate one from the other,” said Sally Natchek, senior director of research of the IFEPB, in a statement. “Given the burden of growing health care costs, it’s likely that health care reform will continue to be at center stage.”

Natchek added that nearly 85 percent of responding plan sponsors think the financial crisis has made major federal reforms more likely.

In addition to plan-sponsor concerns, plan participants are changing their use of the plans, the IFEPB survey found.

During the past six months, about one-third of sponsors noticed an increase in the number of plan members filling out prescriptions and engaging in costly medical procedures before their insurance runs out. About 24 percent of plan sponsors said they observed growth in the number of participants adding dependents to their plans.

“Plan participants are feeling anxious about the possibility of increased cost sharing and a reduction in benefits due to the financial crisis,” Natchek said in a statement. “These fears are not unfounded.”

Survey results are available online at www.ifebp.org/books.asp?6696E or by e-mailing bookstore@ifebp.org or calling (888) 334-3327. Results are free to members and $50 for nonmembers

Filed by Jeff Casale of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.