HRO Today July/August 2015 - 58

The Mercer Report
Choosing Wisely
Advice on making CDHPs work for employers and
employees alike.
By Sandy McCarthy
In this volatile era of healthcare reform, employers and
employees face waves of change and complication.
These include new reporting and coverage requirements,
expanded regulations, a looming excise tax (to begin in
2016 on so-called " Cadillac " healthcare plans), and the
need for employees to become more informed healthcare
consumers.
Indeed, the total health benefi t cost per employee in 2014
was $11,204, a growth of 3.9 percent over the previous
year, according to Mercer's 2014 Healthcare Survey. Even if
the rate of healthcare infl ation remains slow to moderate,
the cost increase remains signifi cant. As another openenrollment
season approaches, many companies are turning
to cost-shifting initiatives, such as adopting consumerdirected
health plans (CDHPs) and expanding spousal and
tobacco-use surcharges.
In fact, our research shows that employers are embracing
CDHPs in a big way, as part of a cost-effective benefi ts
strategy. According to Mercer's 2014 National Survey
of Employer-Sponsored Health Plans, 66 percent of
organizations with more than 500 employees are very likely
to offer a CDHP by 2017. This marks a signifi cant jump in the
mainstreaming of CDHPs, which have long been part of the
expanded benefi ts repertoire of much larger companies.
But as employers share more of the fi nancial burden of
benefi ts with their employees, it forces employees to make
smarter decisions when it comes to medical coverage.
Depending on an employee's needs, the choice of CDHPs
can be a very economical one, with lower premiums and
HSAs (health savings accounts) that can offset the high
deductibles and coinsurance requirements of the plan.
But the wise consumer of CDHPs knows that the emphasis
is on catastrophic coverage, and that it is largely up to the
consumer to cover the more typical costs of healthcare.
Choosing an affordable CDHP may be a no-brainer for
many employees, but if they don't have a clear sense of
the potential fi nancial downside of a high-deductible,
coinsurance-based plan, they could suffer.
After all, illness and injury are unpredictable at any
[58]
HRO TODAY MAGAZINE
| JULY/AUGUST 2015
Sixty-six percent of
organizations with 500
employees are very likely
to offer a CDHP by 2017.
life stage, and many employees fi nd it challenging
to contribute to their HSAs or budget suffi ciently for
healthcare expenses. With CDHPs, they are responsible for
100 percent of most healthcare and prescription expenses
until they hit the high deductible amount, along with a
share (10 percent) of in-network medical expenses and
prescription co-pays until they reach the out-of-pocket
maximum. The fi nancial burden can be a source of
distraction for employees as well as negatively impact their
perception of and appreciation for employer-sponsored
benefi ts.
So many companies are altering their approach to
designing and delivering benefi t programs by offering
an integrated benefi ts package that includes voluntary
programs alongside traditional core offerings. This can
be delivered through traditional benefi ts administration
platforms as well as the private exchange marketplace.
For employees, this amounts to not only a one-stop
shopping experience but also an opportunity to bolster
their CDHP plans, for example, with voluntary choices
that offer broader protection. Taking advantage of this
employer exchanged-based approach, they will pay less
for a more robust benefi ts program than they'd be able to
purchase on their own in the private market.
A strong emphasis on employee education and a broad
menu of benefi t choices can only ensure that the era of
healthcare reform and enlightened consumerism pays off
for every stakeholder.
Sandy McCarthy leads Mercer's benefi ts administration business.

HRO Today July/August 2015

Table of Contents for the Digital Edition of HRO Today July/August 2015

HRO Today July/August 2015 - 1
HRO Today July/August 2015 - 2
HRO Today July/August 2015 - 3
HRO Today July/August 2015 - 4
HRO Today July/August 2015 - 5
HRO Today July/August 2015 - 6
HRO Today July/August 2015 - 7
HRO Today July/August 2015 - 8
HRO Today July/August 2015 - 9
HRO Today July/August 2015 - 10
HRO Today July/August 2015 - 11
HRO Today July/August 2015 - 12
HRO Today July/August 2015 - 13
HRO Today July/August 2015 - 14
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HRO Today July/August 2015 - 16
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HRO Today July/August 2015 - 18
HRO Today July/August 2015 - 19
HRO Today July/August 2015 - 20
HRO Today July/August 2015 - 21
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