United States

Verisight/McGladrey Survey: Few Employers to Move Employees to Exchange

Employers say costs are the leading factor impacting benefits decisions

NEWS RELEASE

CHICAGO,

In the wake of health care reform, employers anticipate further cost-sharing in 2014. However, only five percent plan to pursue employee coverage through a private exchange, and only four percent plan to discontinue coverage entirely and provide a subsidy for employees to obtain coverage in a state or federal exchange. These are just a few of the results from the 2013/2014 Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey, sponsored in part by McGladrey LLP – the leading provider of assurance, tax and consulting services focused on the middle market.

Other actions companies plan to take to address health care costs include: raising employees' portion of premium payments (35 percent); raising employees' co-payments or co-insurance rates (23 percent); raising employees' deductibles (22 percent); and implementing wellness programs (22 percent).

"Health care costs continue to increase at a rate two to three times that of inflation, and employers continue to look for strategic ways to lower costs and improve outcomes," said Verisight Executive Vice President Martha Sadler. "Employees are feeling the impact of these increased costs as well through increased contributions and higher point-of-care cost."

According to the survey, most employers have decided to continue offering group insurance to full-time employees for the next 12 months. "While some companies have announced their decision to discontinue employer-sponsored health coverage for part-time employees – directing them to the public health exchanges for coverage -- more than eight in 10 survey respondents expect to continue coverage for full-time employees during the next plan year," added Sadler.

"With the delay in the employer mandate, many employers naturally have pushed the ‘play or pay decision' process down the road," said Bill O'Malley, a director with McGladrey's Washington National Tax office. "However, some employers particularly those employers with a large percentage of low-income workers are looking at adopting a 'play and play' approach of moving a portion of their workforce to either the new federal and state health care marketplaces or preferably to Medicaid in those states that have expanded Medicaid."

Total rewards decisions

As the fragile economic recovery continues, employers face a difficult balancing act — they must simultaneously keep benefits costs in check while providing effective total rewards programs that attract and retain the best and brightest employees. For the third year, employers reported that health/welfare benefits costs had the most significant impact on their total rewards (salary, bonus, health & welfare benefits, and retirement) decisions (59 percent) for 2013. This was followed by corporate performance (50 percent), retaining key employees (47 percent) and attracting key employees (42 percent).

Other key findings from the survey include:

  • While more than two-thirds (70 percent) of respondents said that they missed some or all of their sales targets over the past 12 months, only 16 percent made or planned changes to their sales compensation plans over the past 12 months.
  • Ninety-five percent of firms surveyed have a defined contribution plan, such as an IRA or 401(k), and report that three in four (76 percent) of employees made salary deferrals into their plan while 77 percent of employers offered matching contributions, up from 68 percent and 74 percent respectively.
  • For the third year in a row, plan sponsors consider the cost of investments (fees) as the most significant factor when evaluating retirement plan offerings. Cost of services and quality of service continue to rank in the top three.
  • Eighty-six percent of employers experienced an increase in health premiums in 2013, up from 79 percent in 2012. Half of the survey respondents said their premiums increased by eight percent, up from one-third in 2012.

About the Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey
Conducted online in August-October 2013, the survey polled more than 1,000 organizations drawn from a national sample. The majority of respondents (65%) are companies with 51 to 1,000 full time employees; however, firms of all sizes are represented. Respondents reflect a wide range of industry types including finance/banking, health care, manufacturing, distribution, construction, not-for-profit and professional services.

About Verisight, Inc.
Founded in 1985 and headquartered in Walnut Creek, California, Verisight is a privately-held, national corporation that offers comprehensive retirement plan services and consulting solutions for a wide range of clients, including employers, plan sponsors, advisors, financial intermediaries and HR administrators. As a recognized leader servicing a wide range of companies with more than $23 billion in retirement plan assets, Verisight is a client-centric company with industry-focused consulting expertise in financial institutions, health care, manufacturing and distribution, not-for-profit and professional services. Verisight maintains complete investment independence and fee transparency. For more information, visit verisightgroup.com and/or connect with us on LinkedIn.

About McGladrey
McGladrey LLP is the leading U.S. provider of assurance, tax and consulting services focused on the middle market, with more than 6,700 people in 75 cities nationwide. McGladrey is a licensed CPA firm and serves clients around the world through RSM International, a global network of independent assurance, tax and consulting firms. McGladrey uses its deep understanding of the needs and aspirations of clients to help them succeed. For more information like us on Facebook at McGladrey News, follow us on Twitter @McGladrey and/or connect with us on LinkedIn.

Contact for Media Only:

Terri Andrews
Director, National Public Relations

terri.andrews@mcgladrey.com
980.233.4710


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