Healthcare-Cost-Increase Rates Slowing
A new survey finds that projected cost increases for all types of medical plans are anticipated to decline by between 0.1 percent and 0.5 percent in 2014.
This drop continues a trend of slow, steady declines generally experienced since 2010, according to New York-based Buck Consultants' 28th National Health Care Trend Survey, which polled 126 insurers and administrators. In its analysis, Buck measured the projected annual increase in employer-provided healthcare benefit costs.
For example, employers offering preferred-provider organization plans are projected to see an 8.7 percent increase in 2014, compared to 9 percent increase last year, and 9.2 percent in 2012. Companies providing point-of-service plans figure to see a cost increase of 8.5 percent, versus 8.8 percent in 2013, and 9 percent in 2012. The cost of high-deductible health plans are anticipated to rise by 8.6 percent, compared to 9.1 percent in both 2013 and 2012.
"This may be a result of the economic slowdown and its impact on consumers' willingness to seek medical treatment," said Harvey Sobel, a Buck principal, consulting actuary and study co-author, in a statement. "Even though the decline is good news, most plan sponsors still find 8 percent to 9 percent cost increases unsustainable."
Benefit-Cost Hikes Coming?
In related news, New York-based Towers Watson finds the cost of providing employee-healthcare benefits has leveled off globally, but indicates a new round of increases may be on the horizon for employers.
The 2014 Towers Watson Global Medical Trends Survey polled 173 medical insurers in 58 countries, finding the cost of employee healthcare benefits is projected to increase by 8.3 percent globally in 2014, compared to a 7.9 percent increase last year, and a 7.7 percent spike in 2012. The smallest average increases are expected to continue throughout Europe, while average upticks in the Asia Pacific (9.3 percent) and the Middle East/Africa regions (10 percent) are projected to remain above worldwide averages.
According to the survey, more than half of insurers (55 percent) in all regions anticipate higher or significantly higher health costs over the next three years. Asia Pacific insurers are especially pessimistic, with more than two-thirds (69 percent) saying they expect costs in the next three years to be higher or significantly higher than current rates.
"While the cost of providing healthcare benefits to employees has stabilized over the past few years, controlling rising costs remains a significant concern for employers worldwide," according to Francis Coleman, director of international consulting at Towers Watson. "In fact, in all regions, health costs continue to rise at twice the rate of inflation. That's a major concern for employers, with many insurers projecting costs to again escalate in the coming years."
IRS Announces HSA-Inflation Adjustments
The Internal Revenue Service has announced the inflation-adjusted amounts for contributions, plan deductibles and out-of-pocket expenses for health-savings accounts for 2015.
Revenue Procedure 2014-30 sets the 2015 limits on HSA contributions at $3,350 for individuals with self-only coverage, and $6,650 for individuals with family coverage. To qualify for an HSA, an individual's coverage in a group health plan must be under a high-deductible health plan.
The guidance provides that, in 2015, HDHPs must have an annual deductible that is not less than $1,300 for self-only coverage, or $2,600 for family coverage. Annual out-of-pocket expenses cannot exceed $6,450 for self-only coverage or $12,900 for family coverage. For plan participants who are 55 or older by Dec. 31, 2015, the 2015 HSA catch-up contribution limit for 2015 remains $1,000.
DOL Publishes COBRA Notices
The U.S. Department of Labor has issued new COBRA-continuation coverage notices that contain provisions giving certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. The coverage is only available when insurance is lost due to certain specific events.
The new notices provide information regarding the health-insurance marketplace as an alternative to COBRA coverage, special enrollment periods to enroll in health-insurance-marketplace coverage, changing from COBRA coverage to coverage in the marketplace, and factors for individuals to consider when selecting coverage options. The new model notices and more information regarding COBRA coverage are available at www.dol.gov/ebsa/COBRA.html.