The financial and health care challenges from COVID-19 make health insurance decisions even more important this year. Large employers are finalizing their health plans for 2021, and smaller companies are making decisions about cost and coverage now. The first glimpse into next year’s plans shows a moderate increase in health care costs. Large employers are expecting average health care costs of $15,500 per employee, a 5.3% increase from 2020 – similar to the increase over the past several years, according to the Business Group on Health’s survey of large employers.
Employers are trying to manage their costs without making big changes to coverage during the pandemic, and they are finding creative ways to keep costs relatively stable for employees – especially as many continue to face high deductibles. More employees are taking an interest in their health coverage now, even if their finances are tight. « With this recent open enrollment for some employers this summer, there were more people enrolling who didn’t elect coverage in the past, » says Wayne Sakamoto, an independent health insurance agent and consultant in Naples, Florida, who works with employers that have open enrollment periods in the summer and fall. « Some of the younger people were concerned that maybe they needed the coverage after all. »
Most large employers have already made their health plan decisions for 2021 and midsize employers are finalizing their plans soon. Here’s what you can expect to see during open enrollment for your employer’s health insurance over the next few months.
- Moderate premium increases; more for families and high-income workers.
- High deductibles but more help.
- More virtual care.
- Expanded focus on mental health services.
- More tools to help employees navigate health care options.
- Growth of centers of excellence and on-site clinics.
Moderate Premium Increases; More for Families and High-Income Workers
Large employers continue to pay the bulk of premiums for their employees, covering 81% of the cost for employee-only coverage and 78% for family coverage this year, which is expected to remain stable in 2021. That results in average premiums of about $3,000 for employees in 2021 – and more for family coverage.
« A lot of companies aren’t really wanting to make changes to their health plans for next year, » says Sakamoto. « They don’t want to create much of a disruption for employees. » Health care costs were generally down in 2020, when many people skipped elective surgeries, regular screenings and doctors’ visits to stay home during the pandemic. But insurers and employers are concerned about what may happen to costs in 2021, when people finally get the delayed screenings and deferred care.
« People are starting to resume some of those services that were deferred, whether it’s going to their annual preventive care visit or annual cancer screening, » says Ellen Kelsay, president and CEO of the Business Group on Health. « If we see a worsening in the fall with the annual flu season, do people hunker down again and not want to venture back to the doctor? And those chronic diseases where people need to be in a very regimented mode for those conditions, we might see a worsening of those conditions. That’s a moving target and hard to get a handle on because of COVID and individual personal preferences as to how comfortable they are with going to the doctor. »
Small and medium-sized employers are waiting to find out how much insurers will raise their rates for 2021, and some predict an extra 5% to 10% because of the unknown cost of deferred care, says William Stuart, director of strategy and compliance at Benefit Strategies LLC, a third-party administrator of health benefits in Manchester, New Hampshire. « They’re hoping that their renewals are going to come in very attractively because they haven’t spent a lot this year, but I think insurers will put a fudge factor in because they think there may be more demand after things open up more, » he says.
Small and medium-sized employers also tend to cover a smaller portion of employees’ premiums – often 65% to 75%, depending on the type of business, says Stuart. They tend to subsidize a larger portion of the costs for their employees than they do for their families, and some add a surcharge to cover a spouse who has the option to get coverage through his or her own employer, says Alan Silver, an actuary and senior director at benefits consulting firm Willis Towers Watson.
More employers are also introducing banded premiums, where the employer covers a larger portion of the premiums for lower-paid employees. « There is a major push in the industry for equity – for essentially ensuring that people who need the benefits can afford them and that those who can afford the benefits on their own can pay more, » says Silver.
Some employers are making other changes to reduce their costs – such as by offering a lower-cost plan with a narrower provider network and adding perks, such as breaks on preventive care or a prescription drug card, to encourage employees to choose that option.
High Deductibles But More Help
Premiums are just part of the cost; most people have to pay high deductibles, too. Fewer employers offer a high-deductible plan as their only option, but it tends to be their most popular plan. The average deductible for large employers’ most popular plans is $1,500 for in-network care for employee-only coverage and $3,000 for family coverage, according to the Business Group on Health survey. Out-of-network deductibles can be double or more. Maximum out-of-pocket spending limits for in-network care averaged $3,500 for employee-only coverage and $7,000 for family coverage in 2020, and are expected to be similar for 2021.
But employers are looking for ways to help ease some of the pain of the high deductibles. Large employers plan to contribute a median of $600 to employees’ health savings accounts in 2021 (and more for family coverage), usually by contributing a lump sum for anyone who chooses the high-deductible health plan rather than matching their contributions. « Employers are contributing to those accounts and wanting to make sure that individuals see the benefit and value and that they understand how to use them, » says Kelsay.
Some health plans are covering more services with no out-of-pocket costs even if the plan generally has a high deductible. « There are studies out there showing that 30% to 35% of all people who have high-deductible plans are not seeking the care they’re supposed to be seeking, particularly folks with chronic conditions are not getting the services they need, » says Vincent Capozzi, senior vice president of sales at AllWays Health Partners, a Massachusetts-based health plan that works with employers of all sizes. « We designed our deductible products to have a lot of free or low-cost services because we want to encourage people to get the care, especially if they have chronic conditions. » Employees don’t pay for the first six visits to an occupational therapist, physical therapist or chiropractor, or for the first child care sick visit, for example. Some medications are offered with no deductibles or copayments, too.
The downside, however, is that having more coverage that isn’t subject to the deductible (other than some preventive care) generally makes the health plan ineligible for a health savings account, although the list of eligible pre-deductible coverage was temporarily expanded because of COVID. Instead, these employers generally offer health reimbursement accounts, or HRAs, where the employers contribute money to an account that employees can use for certain out-of-pocket costs. HRAs are more restrictive than HSAs, and employees can’t take the balance with them when they leave their job. Employers are getting more active in lobbying legislators to change the HSA rules and permit more coverage that isn’t subject to the deductible and can improve employees’ health, such as permanently exempting telehealth and certain treatments for chronic conditions from the deductibles, says Kelsay.
More Virtual Care
Employers have been trying to get employees to take advantage of virtual care options for the past several years, and many finally started using these services because of the coronavirus pandemic. « Virtual care has accelerated exponentially, » according to the Business Group on Health report.
Virtual care was originally considered to be a low-cost way to avoid going to the more-expensive emergency room or urgent care center for basic ailments such as sinus and upper respiratory infections, allergies, flu, coughs and rashes. But during the COVID shutdowns, a wide variety of doctors were using telehealth to see patients remotely. People were happy with the experience and liked the convenience and cost saving from the virtual care. Now, 80% of employers believe virtual care will have a significant impact on how care is delivered in the future (up from 50% in 2018), and 53% of the large employers expect to implement more virtual care solutions in 2021– their top initiative for the year, according to the study.
Most employers offer telehealth for minor, acute services and mental health, and they are expanding into programs such as weight management, diabetes care, prenatal care, dermatology, fertility care, musculoskeletal care management/physical therapy, sleep management and cardiac care management.
Some plans are focusing on improving their telehealth services. AllWays Health Partners, for example, had originally contracted with a third-party telehealth program staffed by doctors from outside of the area. But the service became much more popular when they started having their own in-network providers, including Mass General’s respected urgent care physicians, provide the virtual care in Massachusetts. « Even before the pandemic, we quadrupled the amount of telemedicine visits with that program, » says Capozzi.
Expanded Focus on Mental Health Services
Employers have been offering more behavioral health services over the past several years, expanding coverage for visits with a therapist or psychologist and other programs. But there has been a shortage of mental health providers in many areas, often causing long wait times for appointments or travel times of over an hour for office visits. Employers are recognizing how important behavioral health services have become, especially as people face challenges from the pandemic. Employers’ second top initiative for 2021 is expanding access to mental health services, and 43% added new mental health benefits or offerings to support employees working from home.
« There was a big focus on behavioral health before the pandemic, and there were challenges to access the providers, » says Kelsay. Many are using virtual visits to expand employees’ access to behavioral health specialists, which has helped during the pandemic and also addresses the shortage issue, making it easier to meet with providers from anywhere in the country. Employees also like the convenience and privacy of being able to meet with the therapist or psychiatrist without leaving their home.
More Tools to Help Employees Navigate Health Care Options
Employers are offering more tools to help employees become better health care shoppers, which can be particularly important if they have high-deductible plans. They’re building price transparency tools that help employees compare costs for services from different providers, and they’re also offering resources to help employees choose a path of care, such as online decision-making tools and second opinion services. « The second opinion service is a considerable value if somebody has been diagnosed with a disease or told that they need to have surgery, » says Kelsay. « A panel of expert physicians look at the recommendation of the first doctor and your medical results, and then they concur or let you know that there might be a better path of treatment for you. They act as a sounding board to give you a little more peace of mind in a trying time. »
Growth of Centers of Excellence and On-Site Clinics
Employers have been adding more centers of excellence to their health plans for the past several years, charging in-network rates and often covering travel costs to encourage employees to receive treatment at selected hospitals known for high-quality specialty care, such as the Cleveland Clinic for cardiac care.
Use of centers of excellence has been down this year while travel was more difficult because of the pandemic, but 24% of employers still plan to expand their coverage in 2021. The most popular types of care covered are bariatric surgery, musculoskeletal conditions and procedures, cancer, cardiac care and fertility.
Meanwhile, many large employers are also expanding their on-site health clinics which provide basic health care services. « Those on-site clinics have proven to be very flexible and adapted to the changing times, » says Kelsay. « They’re expanding their services to support COVID issues, such as temperature checks and helping with screening. » They could also provide a vaccine when one is available.