The Commonwealth Fund recently issued a brief on “What Employers Say About the Future of Employer-Sponsored Health Insurance.” American employers have had ties to health insurance since World War II, but programs like the Affordable Care Act and Inflation Reduction Act could shift that bond. The Fund interviewed over two dozen benefits executives. Highlights are presented here as food for thought.
Impact of the Affordable Care Act
Enacted in March 2010, the Affordable Care Act (ACA) sought to make affordable healthcare more readily available. As of April 2022, total related enrollments had reached over 35 million Americans, more than 10 percent of the current U.S. population.
The Commonwealth Fund’s brief found that not all employers embrace ACA insurance exchanges. Reasons given for their lack of support included:
- Their group health plans are a better deal for employees.
- They provide employees with better ease of use, tools, knowledge, and resources for making coverage decisions.
- They are hesitant to upend the traditional insurance model, preferring a “wait and see” stance.
- They view health benefits as a valuable recruitment and retention tool.
Despite the ACA’s existence, a 2022 Employee Benefit Research Institute (EBRI) study reported that an average of 70% of working Americans held employment-based health coverage between 2013 to 2020.
The Fund brief also addresses Individual Coverage Health Reimbursement Arrangements (ICHRAs). ICHRAs enable employees to enroll in selected non-employer-sponsored coverage and pay the premiums using employer-contributed funds. Similar to their thoughts on insurance exchanges, employers expressed concerns regarding loss of control. However, the HRA Council has reported exponential ICHRA growth, particularly in small to medium businesses.
How TPAs Can Help Concerned Employers
The findings outlined above reflect that employers and employees continue to support the traditional company-sponsored group health insurance model.
Selecting health plans that satisfy employers and employees simultaneously in the financial sense can be challenging. Yet, employers can help offset rising employee costs with consumer-directed healthcare options including Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).
FSAs may have been offered by an employer for many years, yet some employees have never enrolled. Common employee concerns include unfamiliarity with eligible products and services, misunderstandings about how easy they are to use, and fear of losing money if they can’t spend their full balance by year’s end. HSAs roll over automatically at the end of each plan year but face other adoption and usage challenges similar to those of FSAs.
According to the Bureau of Labor Statistics, 43% of workers in private companies and 71% of state and local government workers had access to a healthcare FSA in 2022. Applying those percentages to the March 2022 seasonally adjusted employment of 150,856,000, we can estimate that 65 million American workers have FSA access. Yet Aite Novarica estimates there were only 32.6 million FSA accounts in 2022. And according to a 2020 JAMA Network survey, roughly 33% of adults enrolled in a qualifying high-deductible health plan (HDHP) had yet to open an HSA.
Effective education and communication tools are crucial to increasing participation and usage. That’s where TPAs can make a big difference. (For more information, see our whitepaper entitled “How to Maximize Account Adoption During Enrollment Season and Deliver a Better Benefit Experience,” and blog post, “Help Employees Understand Their Benefits“).
Although diverse employee needs and demands are changing the landscape of employer-sponsored insurance, its role in providing healthcare coverage for the majority of working Americans appears to remain strong for the foreseeable future. In combination with employer-sponsored insurance, FSA and HSA accounts strengthen the overall benefits program for employees. TPAs can help by providing employee education and communication tools to increase adoption and usage.
DataPath has been a full-service TPA solutions provider for nearly four decades. The company’s cloud-based Summit platform is the industry’s first all-in-one solution for CDH, HSA, Well-Being, COBRA, and Billing administration. Please enter your email (above right) to be notified when new blog articles are published.