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Employers Absorb Health Benefit Cost Increase, Expand Services

New Wells Fargo health benefits survey reveals employers biting the bullet to keep health benefits up to par and employee out-of-pocket costs low

Despite rising prices and tightening budgets, the enrollment season for 2009 brought little change to the core aspects of employers' benefit offerings, according to a new nationwide survey by Wells Fargo Insurance Services. Employers absorbed most of the benefits' cost increase this year while they added access to tools like Health Savings Accounts and wellness programs.

The Wells Fargo Benefits Marketplace Survey, which includes responses from more than 400 U.S. employers of different sizes and industries, shows that Consumer Directed Health Plans (CDHP) continue to gain adoption, now with eight million members total. Six percent of survey respondents added a Health Savings Account (HSA) plan for 2009 while 3 percent added a Health Reimbursement Account (HRA) plan, bringing the total of employers offering a CDHP to 28 percent. Another 10 percent indicated they plan to offer a CDHP in 2010.

"We certainly didn't expect these results at the same time as rising employer costs and tight budgets," says Dan Gowen, senior vice president for Wells Fargo Insurance Services. "Despite the inflationary adjustments imposed by the insurance companies, the majority of employers absorbed the impact this past year without changes to plan design or increases to the employee contribution percentages."

Most of the survey respondents resisted or refrained from making changes to the basic components of their plans. In fact, 82 percent remained with their current medical carrier. Additionally, over 60 percent made no changes to their medical plan design, and over 75 percent made no revisions to their prescription plan. No employer eliminated medical benefits entirely, and 72 percent did not ask employees to pay a larger percentage of the total costs.

Other findings showed that employers favored wellness programs. Smoking cessation and biometric screening programs were the most common programs added this past year. Tying participation in a wellness program to financial incentives also proved popular. Of those employers that added a wellness program for 2009, 51 percent offered an incentive to participate. Employers in the Midwest (78 percent) offered the highest level of wellness incentives. "If the recession continues and future layoffs are imminent, we expect our customers to strongly consider adding programs for smoking, stress and weight management," says Gowen.

Disease management programs also are offered widely, with diabetes and asthma being the most common programs added for 2009. However, employers did not adopt financial incentives (20.4 percent) as widely as wellness programs.

As employers look to trim their overall benefit budgets, voluntary benefit plans are gaining in popularity. Of those employers that offered at least one new voluntary program, 48 percent offered two or more. The most common combination among these products is accident, cancer and critical illness benefits, with 25 percent of employers adding them.