Employers Act		
	 to Avoid Excise Tax
	 Insights From the 2013 Health Care Changes Ahead Survey
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Infographic: Employers Act to Avoid Excise Tax - Towers Watson


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Insights From the Towers Watson 2013 Health Care Changes Ahead Survey: the actions organizations are considering to combat rising costs and avoid the excise tax.

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Infographic: Employers Act to Avoid Excise Tax - Towers Watson

  1. 1. Employers Act to Avoid Excise Tax Insights From the 2013 Health Care Changes Ahead Survey Over the short term, virtually all employers (98%) plan to retain active medical plans amid projected cost increases and excise tax concerns, according to Towers Watson’s Health Care Changes Ahead Survey of 420 midsize and large companies. To combat escalating costs, companies will make changes to their health benefit programs and implement emerging strategies and tactics. Health Care Reform Will Spur Employers to Action Nearly three- quarters (72%) of employers believe that health care reform will raise costs for active full-time employees. Six in 10 (61%) expect to trigger the 2018 excise tax without making adjustments to their benefit strategy. 72% 61% With this in mind, 60% respond that the tax will be an important factor in framing their health care strategies over the next two years. Role of the CFO in Solving the Cost Burden To help solve cost challenges, CFOs are becoming more actively engaged in making health care strategy decisions. 46%of companies report more CFO influence than three to five years ago.10% Board of directors 36% CEO 30% Business unit leaders Top Strategies to Control Costs and Avoid the Excise Tax In an effort to keep health benefit plans affordable and viable for the long term, employers will consider the following actions: Provider Accountability Strategies Employee Accountability Strategies 2014 Health Care Cost Increases for Active Employees Health care costs are projected to increase by 5.2% in 2014. •• 2014 total plan costs are expected to rise to $12,769 (total employer/employee health care costs were $12,136 per active employee in 2013*) •• Employer cost up 4.7%, to $9,964 •• Employee cost up 6.9%, to $2,805 *Source: 2013 Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care 8.0% 8.0% 5.6% 5.5% 6.8% 5.5% 7.0% 5.9% 6.7% 5.2% 2010 2011 2012 2013 2014 Trends before plan changes Trends after plan changes Using reference-based pricing in the health plan that establishes a set price for a medical treatment Using value-based benefit designs to promote effective medical interventions that improve health outcomes Offering a benefit differential for use of a high-performance network 47% 40% 36% 33% Evaluating new financial terms and performance standards beyond cost and operational performance with their health plan vendors Provider Accountability Strategies Employers will also change plan designs to mitigate cost increases. 40% expect to take this step in 2014, and another 31% are considering it for 2015 or 2016. Employee Accountability Strategies Reduce coverage subsidies, especially for spouses and dependents ••34% of employers expect to increase premium contributions for dependent coverage by five or more percentage points (versus 21% in 2013). 25% 28% 49% Provide price and hospital-quality transparency tools to help employees make wise health care decisions Implement a full-replacement, account-based health plan (ABHP) to help employees become more informed health care consumers Offer outcome-based incentives to encourage healthy behaviors