Many employers will choose to make benefit changes to their health plans next year to hold down costs, rather than sticking with current benefits to avoid certain new coverage requirements of the health reform law, according to a new survey.
Employers will try to hold health insurance cost increases to 5.9% in 2011, according to Mercer, a benefit consulting firm. To keep costs down, some employers will have to make benefit changes that will disqualify them from an exemption in the Patient Protection and Affordable Care Act.
Under the law, health plans have “grandfathered” status if they don't make certain benefit changes, such as raising members' co-insurance. Grandfathered status means that plans are exempt from certain coverage mandates, including one that bars member copayments for preventive care.
A little more than half of 1,100 employers surveyed by Mercer said they expect to retain grandfathered status next year. About 32% expect to lose this status for all plans, and another 15% said they would lose the status for at least one plan. Of those that expect to lose grandfathered status next year, two-thirds said they would save more money by changing their benefit design than by being grandfathered, Mercer said.
If employers surveyed made no plan changes, their costs would rise by 10%, Mercer said.
“The rules for maintaining grandfathered status were tougher than many employers expected,” said Tracy Watts, a Mercer partner, in a statement. “As they start to get a clearer picture of projected cost for 2011, many are finding they need more flexibility to get their cost increases down to a level they can handle.”
