9benefits decisions facing employers in 2016

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Table of contents

1 Decide whether to pay or play 4

2 Manage required benefits reporting 5

3 Weigh the pros and cons of an HDHP 6

4 Switch to a health insurance exchange 7

5 Make voluntary benefits part of the benefits package 8

6 Offer tools to help employees make benefits decisions 9

7 Use high-tech gadgets and wellness incentives 10

8 Plan for spouse or partner coverage options 11

9 Start now to prepare for the Cadillac Tax 12

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9 benefits decisions facing employers in 2016

May your choices reflect your hopes, not your fears. – Nelson Mandela

When you come to a fork in the road, take it. – Yogi Berra

Making decisions about employee benefits is no small task. Health

care costs continue to increase, so the fine details of benefits plan

options, communication and delivery can have a very real effect on

employee satisfaction and retention. A company’s benefits package

can be the deciding factor when a prospective employee considers

a job offer, and improving benefits is one thing many employees say

their companies could do to keep them in their jobs.1 As your business

tackles tough questions about benefits, here are nine important deci-

sions to consider in the year ahead.

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Decide whether to pay or play

In 2016, employers with at least 50 full-time equivalent employees

(FTEs) must offer affordable, minimum-value health coverage to at

least 95 percent of their full-time employees and their dependents, or

face a penalty. Employers will need to be certain they are providing

coverage that meets the law’s requirements. Only small employers

(those with fewer than 50 FTEs) will remain unaffected by penalties

for not providing affordable, minimum-value coverage to their

workforces. For more information, see 5 things to know and do

to guard against health care reform penalties and calculate your

company’s FTEs with the FTE calculator.

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5

Manage required benefits reporting

Starting in 2016, businesses will be required to report information

about their employee health coverage, including basic employee

data, dates and type of coverage, cost-sharing and any other infor-

mation required by the IRS. Since many employers struggle to make

heads or tails of health care reform requirements, they may choose

to have a consultant or provider help file the reports. To learn more

about exactly what’s required, take a look at these fact sheets:

» Employer-Sponsored Coverage Reporting

» Minimum Essential Coverage Reporting

» W-2 Reporting

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6

Weigh the pros and cons of an HDHP

Rising health care costs have led many employers to consider high-deduct-

ible health plans (HDHPs). A recent PricewaterhouseCoopers study found

that 83 percent of employers are now offering HDHPs, and 25 percent are

offering only HDHPs.2 It’s important to note that roughly half of workers (52

percent) who chose HDHPs last year at least somewhat agree they regret

their decisions. Still, many will select high-deductible plans again, some

because they’re the only employer-sponsored insurance options available,

others because cost is the driving factor for plan selection.3 To learn more

about how to implement an HDHP with out-of-pocket cost protection,

see: The perfect team: How voluntary insurance complements

high-deductible health plans.

383%

of employers are now offering HDHPs, and

25%are offering only

HDHPs.2

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Switch to a health insurance exchange

Exchanges are online benefits marketplaces where individuals and

businesses can buy insurance. Exchanges can do some of the

heavy lifting that usually accompanies workplace benefits, such

as paperwork or coordinating between multiple carriers. This can

help businesses to save on administrative costs. Additionally, some

exchanges offer a defined contribution option, so employers can

pay a fixed amount for benefits, allowing employees to buy up if they

want additional health care coverage and helping to make health care

costs predictable for employers. To learn more, see 6 key facts about

health care exchanges.

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Make voluntary benefits part of the benefits package

Voluntary insurance has long served as a way to help protect

employees when they’re sick or injured – regardless of their ma-

jor medical insurance coverage. But now, more than ever, these

benefits help provide employees with a financial safety net for

unexpected medical expenses.

Voluntary policies can be offered at no direct cost to the policy-

holder’s employer and provide cash for costs not covered by major

medical insurance. To learn more, see What is voluntary insurance

and why do employees need it?

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9

Offer tools to help employees make benefits decisions

With greater responsibility for their health care costs, employees are

eager to have the resources they need to make sound benefits deci-

sions. Many even anticipate them: 89 percent of employees at least

somewhat agree that they expect more decision-making tools and

support during their health insurance and benefits selection/enroll-

ment experiences, because they’re more responsible for their health

care costs than in years past.1 A few resources that employees say

are helpful include interactive online tools and summaries of past

medical claims and expenses.2 To learn more about open enrollment

best practices, see 2015 Open Enrollment Trends.

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Use high-tech gadgets and wellness incentives

Health care reform rules encourage employers to use incentive pro-

grams, and allow employers to reward employees with up to 30 per-

cent lower rates for participation (and up to 50 percent for tobacco

use cessation). So do employees use these tools? Aflac’s 2015 Open

Enrollment Survey found that many employees use them when their

employers make them available. For instance, just 10 percent of em-

ployees say their employers offered wearable devices to track well-

ness or other health conditions, but over half (54 percent) of those

with the option used it.3 Learn more about the wellness programs

under the Affordable Care Act.

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Plan for spouse or partner coverage options

Health care reform doesn’t require companies to extend coverage

to spouses, which means businesses have flexibility when it

comes to offering spouse or partner coverage. With the legalization

of same-sex marriage, some employers are making benefits

requirements universal for all families applying for benefits. Still,

others are cutting back on spousal benefits entirely.

Before making drastic changes to spousal coverage, it’s important

to consider the ramifications for your business: Among employees

married or living with partners, 72 percent say they’d feel extremely

or very negatively if their company dropped spouse/partner coverage

from their employer-sponsored health insurance.1,5 Learn more about

the importance of benefits to employees.

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Start now to prepare for the Cadillac Tax

While it’s not going into effect this year, a 40 percent Cadillac Tax

(also called the health care law’s excise tax) is weighing heavy on

many employers’ minds. As it stands, the law is scheduled to take

effect for applicable coverage with plan years beginning on or after

Jan. 1, 2020. Although the tax is still several years away and regula-

tions may evolve before it is implemented, employers should begin

now to determine how their plans may be affected when the tax

becomes reality. For a more in-depth discussion about this tax, see

Cadillac Tax frequently asked questions and answers.

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Sources1 2015 Aflac WorkForces Report, conducted by Research Now Jan. 26 – Feb.

11, 2015, among 1,977 benefits decision-makers and 5,337 employees at U.S.

companies with at least three employees.

2 PricewaterhouseCoopers. “Health and Well-being Touchstone Survey results.”

Accessed Sept. 24, 2015.

3 2015 Aflac Open Enrollment Survey, conducted by Lightspeed GMI June 23 –

July 2, 2015, among 2,000 adults ages 18 and older who are employed full or

part time in the U.S. at a company with three or more employees.

4 The Henry J. Kaiser Family Foundation (2015). Health Insurance Deductibles

Outpacing Wage Increases, Study Finds. Accessed on Sept. 24, 2015.

5 Among those with employers that currently offer spouse/domestic partner

coverage.

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This article is for informational purposes only and is not intended to be a solicitation.

This material is intended to provide general information about an evolving topic and

does not constitute legal, tax or accounting advice regarding any specific situation.

Aflac cannot anticipate all the facts that a particular employer or individual will have to

consider in their benefits decision-making process. We strongly encourage readers

to discuss their HCR situations with their advisors to determine the actions they need

to take or to visit healthcare.gov (which may also be contacted at 1-800-318-2596)

for additional information.

Keep up to date and follow Aflac at:

@Aflac us.linkedin.com/company/Aflac

YouTube.com/Aflac

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