Benefits Selling's annual employer survey found that many things are business as usual in the benefits world: For one thing, employers continue to try to restrain costs while attracting and retaining employees with the richest possible benefit packages.

About 67 percent of employers offer health care benefits. Slightly fewer than half of respondents offer health savings plans, or HSAs, and a little more than 68 percent agreed employees think health insurance is the most important benefit they have.

This year, though, the Patient Protection and Affordable Care Act is the big difference. A large majority of respondents—80 percent—say health care reform has made them rethink their employee benefit offerings.

Rampant confusion

Perhaps the biggest effect of PPACA so far is the confusion it's created. Many businesses simply don't understand their choices under the new law.

“I'm very disappointed with the way Obamacare is being handled. People are so confused.” That's the word from Bruce Axler, principal at Axler Insurance Services in South San Francisco, Calif., where he works with businesses with two to 25 employees.

“Most of them are wondering what Obamacare is going to do to them,” Axler says. “Some of them need to do nothing; others will need to make changes in order to avoid paying a penalty.”

Businesses of all sizes have unhappy owners and managers, agrees Ken Neathery, owner of Lone Star Insurance Services in Sherman, Texas.

“They don't understand it, even though they've read everything they can get their hands on. The larger the employer, the more questions they have,” he says.

In small groups, Neathery adds, “the questions are 'What's going to happen? What's this tax I'm hearing about? Am I going to have to pay more?' People know things are changing this fall and they need to do something by next March, but they don't know anything else. We're doing our best to tell them that this isn't a catastrophe.”

Unavailable plan details

Neathery's task—like many others—is complicated by the fact that most states haven't yet released information about the costs and features of programs that will be available on government exchanges, with enrollment beginning Oct. 1 for policies that take effect Jan. 1.

In Texas, Neathery says, agents haven't seen product information, though they've seen estimates.

The situation isn't any better in California, Axler says. No one knows how much plans on the California exchange will cost or what features they'll offer. The state is also missing other important administrative rules.

“I've advised a lot of my clients to take health savings accounts,” Axler says. “They have, but now they're not sure what to do, and neither am I. The federal government has still not come down with a ruling on the maximum deductible for HSAs.”

In Jacksonville, Fla., Susan Guy doesn't know anything about exchange plan prices and features—or about January prices for plans that aren't on t

he Florida exchange.

“Nobody wants to quote a new group, because right now they can't get the data to write the risk,” says Guy, who is a benefits count executive at Greene Hazel Insurance Group, headquarte

red in Jacksonville. “We don't know what the group rates for January will be for plans that aren't on the exchange.”

High prices a near certainty

When exchange plan prices are finally announced, benefits professionals overwhelmingly expect that they will be higher than current plan prices. “There's no question that group rates are going to be higher,” Axler says.

That's also true for plans not sold on the exchanges.

“I haven't seen many renewals come in, and I haven't seen one come in at less than a 27 percent premium increase,” Guy says.

In the face of substantial premium increases, some companies have considered asking employees to do without employer-provided health coverage.

“There may be situations where an employer wants to give someone the money to buy a policy on the exchange,” says Deborah Hebb, vice president of benefits at Keller Stonebraker Insurance in Hagerstown, Md.

That's particularly true for low-paid or part-time workers, who could benefit from government subsidies and ultimately have better coverage through an exchange than through an employer's group plan. That's a potentially risky tactic, Hebb warns. “It will be one to three years down the line before we know whether the premiums are right for the population. What happens if the individual market gets too expensive and people come back to you for a group plan? An employer might need to reduce the salaries that it increased to help people buy individual cove

rage. It's very hard to take away what you've given,” she says.

Other firms have considered letting employees fend for themselves, says Bill Shock, who works for the Unland Companies in Pekin, Ill. “The initial reaction is 'Why wouldn't we just discontinue our health plan?' But when we help them work through that decision tree, in 90-plus percent of the cases, they've decided to keep their health plan and make it as robust as they can.”

The reason, Shock says, is simple.

“The benefit discussion here has always been driven by the need to attract and retain talented individual. In a company that does business with Caterpillar, for instance, if they think that they have somebody that relates well with Caterpillar, the employer wants to make sure that they keep that person. Benefits are a key part of that,” he says.

In fact, Neathery says, he sees firms that don't already offer group health plans now thinking about offering them. “A lot of the smaller groups are thinking of asking employees to help a bit on the premium, so they can offer better group plans than you could find on the exchanges,” he says. (About 25 percent of employers have already reduced their contribution to defined-contribution plans as a response to the recession, survey results indicated.)

Business owners also see the numeric advantages of offering a core health plan, which is considered a tax-deductible business expense. The penalties for not offering health coverage, by contrast, are not tax deductible. Moreover, they increase in years three and four of health care reform, giving employers an even bigger reason to stick with or begin benefits plan now.

Keeping costs down

That doesn't mean that employers are happy to absorb the cost of more expensive health coverage.

“I think we'll see it come out in higher prices,” Axler says. “I haven't seen situations where employers are planning to cut back workers' hours or lay people off, but free cafeterias, business outings and retreats, softball games, and other treats are absolutely getting trimmed.”

In her practice, Guy says, “I have heard talk of not paying anything toward coverage for employees' spouses and kids.” Guy adds that this solution may play poorly with workforces, as the out-of-pocket cost of insuring a family could easily eat up a paycheck.

Wellness programs are also very popular, Guy says, because although preexisting conditions will no longer matter, it will be possible for companies to pay less if they prove that their group is healthier than average.

“One company has more than 45,000 workers, and they're making employees and spouses come in for weigh-ins and blood tests, in order to get a cheaper plan. It doesn't matter what the results are, but you have to do it or pay 25 percent more out of pocket,” she says.

In some instances, employers might hire case managers to help specific employees lose weight, reduce their cholesterol, or manage chronic health conditions.

“They want a better rate on a healthier group,” Guy says.

Survey results showed that more than half of responding companies, roughly 57 percent, have already implemented wellness programs designed to save on health care costs. That number may increase.

Likewise, 71 percent of companies said they've considered expanding the use or implementation of consumer-driven plans.

B rokers' role

Just over 82 percent of survey respondents

use a benefits broker or agent, but guaranteed issue, with no denials or price hikes for those with preexisting conditions, means that there will also be less underwriting to do. That's a potentially alarming situation for many brokers.

“There are going to be a lot of underwriters looking for a job. There won't be a lot to do,” Neathery predicts.

Other benefits professionals are much more confident.

“I think the broker's position in this is changing,” Shock says. “It used to be that a broker's job was to explain, market, and find cost-effective solutions. Now a broker will be more of a consultant, a general advisor. We can help employers understand what's available and the best ways to structure a benefit plan. We need to be good partners, not just vendors.”

The need for dependably knowledgeable consultants is particularly keen now, as the new rules take effect. In Hebb's practice, she says, “we're not telling clients anything until we know it's final.”

In fact, the company is asking clients to ignore what they hear elsewhere.

“There's so much information out there, and so much of it will turn out to be wrong,” she says.

Though the new rules will let more people get insurance, the legislation may also help brokers make up on volume what they lose in underwriting complexity.

“Yes, commissions will be lower, but we'll have more people coming in, and if it takes 10 minutes to fill out an individual application with guaranteed issue, we'll make a little up on volume,” says Stephen Ennis, who owns McDowall and Keeney Insurance in Sacramento, Calif.

Along the way, Ennis adds, brokers and employers and individuals will learn to navigate the new system.

“I don't know what the next year or two will look like. It will be crazy, but it will work its way out,” Ennis says.

Benefits professionals across the country are crossing their fingers he's right.

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