Nearly 1 Out of 4 Companies Seeing Health Insurance Premiums Rise by More than 10 Percent

ITASCA, Ill., Aug. 20, 2015 /PRNewswire/ -- Despite the healthcare reforms implemented under the Patient Protection and Affordable Care Act, 90 percent of employers are facing increases in the premiums they pay for employee health plans, with nearly 25 percent of employers seeing rate increases in the double digits according to a new survey of 3,031 U.S. employers. This puts U.S. employers in the challenging position of needing to balance two competing priorities: attracting and retaining a competitive workforce, and maintaining or decreasing overall operating costs.

These findings were part of the 2015 Arthur J. Gallagher & Co. (Gallagher) Benefits Strategy & Benchmarking Survey, one of the largest and most comprehensive benefits surveys of its kind, spanning a wide range of industries, geographic regions, and employer sizes and types. This annual study covers major benefits categories including medical; wellness; dental; absence management and disability; life insurance; retirement; voluntary and employee communication.

Employers Exploring All Options to Control Costs

"By far, the top benefits concern among employers is the continued rise in the cost of providing group medical coverage for employees," said James W. Durkin, Jr., President of Gallagher Benefit Services, Inc. – Arthur J. Gallagher & Co.'s Employee Benefits Consulting and Brokerage operations. "Employers are examining all available options to rein in medical costs, while still offering competitive benefits packages that help them attract and retain the best employees in a tightening labor market. With the Cadillac tax due to take effect in 2018, employers are expected to increasingly turn to newer, alternative cost-control tactics."

One strategy employers are using to rein in overall healthcare spending is to require employees to shoulder a larger share of the expense in the form of higher deductibles. This year, in-network family plan deductibles average $3,000, while out-of-network deductibles average $4,500. Annual deductibles for employee-only in-network plans now average $1,200, and out-of-network coverage deductibles are an average of $2,000.

Employees Consider Benefits Package as a Whole

According to the survey, employees place greater value on their total benefits and compensation package, rather than on individual components. "As a result, we recommend employers focus on a benefits and compensation strategy that both improves the performance of their workforce and is appreciated by them. The best way to accomplish this is to listen to your employees and understand that certain employee segments have different needs and wants," Durkin added.

Wellness Programs Widely Available but Poorly Utilized by Employees

Wellness programs are becoming more aligned with employees' personal sense of wellbeing, including their physical, financial, emotional, career and community health. As a result, wellness programs are also becoming more commonplace in organizations of all sizes. Among all employer respondents, 42 percent stated they have at least one wellness program in place. This figure rises to 70 percent for employers with at least 1,000 employees.

However, employee participation in wellness programs remains a concern according to 72 percent of employers that offer such programs. In particular, the survey uncovered gaps in benefits that could help secure employees' financial wellbeing. An opportunity to close one of these gaps exists for 22 percent of employers who offer no retirement program for their employees.

Survey Findings Offer Insights for Employers

"Today's employers are trying to achieve balance between two competing concerns, the need to have the best possible people to grow their businesses while decreasing operating costs, including controlling healthcare expenses. Gallagher's Benefits Strategy & Benchmarking Survey can provide clarity on the range of issues employers are facing, help executives understand the variety of solutions that are available and, ultimately, assist them in developing a comprehensive benefits and compensation strategy that enables them to succeed in a world of increasing complexity," Durkin said.

ABOUT THE BENEFITS STRATEGY & BENCHMARKING SURVEY

Gallagher Benefit Services, Inc., the Employee Benefits Consulting and Brokerage operations of Arthur J. Gallagher & Co., developed the Benefits Strategy & Benchmarking Survey to provide employers with insights and best practices for managing benefits costs while also attracting and retaining top talent. The 2015 survey included responses from 3,031 organizations, which is a 66 percent increase from the company's 2014 sample size. Additional survey results can be found at www.ajg.com/NBS_2015.

ABOUT ARTHUR J. GALLAGHER & CO.

Arthur J. Gallagher & Co. (NYSE: AJG), an international insurance brokerage and risk management services firm, is headquartered in Itasca, Illinois, has operations in 31 countries and offers client-service capabilities in more than 140 countries around the world through a network of correspondent brokers and consultants.

SOURCE Arthur J. Gallagher & Co.

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