Survey: Most employers won't drop health coverage

Though employers have been expected to drop employee health insurance coverage in droves as the core provisions of the health reform law goes into effect in 2014, a new survey suggests that won't happen. 

In the poll of 440 employers by HR consulting firm Towers Watson & Co., 88 percent reported no plans to terminate coverage in 2014 or after for full-time employees. Eleven percent said they weren't sure and just 1 percent said coverage would be dropped for some employees.

The $2,000 fine per full-time employee to be levied against employers who do not provide coverage poses a big incentive to maintain coverage, but the survey also points to the salary bumps that would be required to enable workers to buy coverage on their own and the need to provide coverage to competitively hire and retain talent, Business Insurance reports.

Most respondents, however, said they must take steps to control costs to avoid an excise tax on costlier plans. By 2018, a 40 percent excise tax will be imposed if premiums exceed $10,200 for single coverage and $27,500 for family coverage. Insurers and third-party administrators are expected to recover these costs from employer plans.

After plan changes, employers expect health plan costs to rise by 5.3 percent next year, compared with a rise of 5.9 percent in 2012, according to the survey.

And respondents' interest in plans featuring health savings or reimbursement accounts continues to grow. Nearly 60 percent offer them now, but 80 percent expect to offer them by 2018.

No more than 10 percent of employers are expected to drop coverage in the next two years, according to a recent Government Accountability Office report. In analyzing 19 surveys, it found smaller employers were more likely to drop health coverage, but others expect to consider changing benefit designs, including increasing employee costs.

Wellness programs are at the forefront of employers' plans to control costs, according to a survey from the National Business Group on Health that put the expected cost increase at 7 percent next year.

Meanwhile, the decline in employer-sponsored health coverage is part of an ongoing trend. About 67.5 percent of employers offered coverage in 2010, down from 70.1 percent in 1997. The percentage of workers covered by those plans decreased from 60.3 percent to 56.5 percent, according an Employee Benefit Research Institute survey.  

To learn more:
- here's the Towers Watson & Co. survey announcement
- read the Business Insurance article

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