Employers are planning on making big changes to benefits plans as they aim to control rising healthcare costs, avoid the Cadillac tax and keep employees healthy, happy and productive.

More changes are coming in 2016 — including cost-shifting, an increased focus on wellness and enhanced voluntary benefit offerings — despite the fact that most employers already modified their benefits plan last year, says Wells Fargo Insurance, which recently released its annual Employee Benefits Trends Study.

More than half (58%) of the employers surveyed expect their medical plan costs to exceed the thresholds for the Affordable Care Act’s Cadillac tax, which was originally due to take effect in 2018, but has been delayed until 2020. Additionally, 70% of employers expect their budgets for benefit plans to increase, the report says.

The changes are a result of employers balancing business goals with controlling cost, all while staying ACA-compliant, says Dan Gowen, national practice leader with Wells Fargo Insurance Employee Benefits.

“The delay in the Cadillac tax was a welcome event for many employers,” Gowen says. “For those that were challenged with ensuring their costs were under the threshold, they now have more time to enact strategies, such as increasing health and productivity measures, that will not only curb their cost trend rate but will also have a long-term impact on the health of their population.”

The findings from Wells Fargo Insurance, which surveyed more than 650 middle-market companies and large corporations to better understand how organizations are responding to healthcare reform requirements, seem to point to a good-news, bad-news situation for employees when it comes to their benefits offerings.

Half of the employers in the study said they will continue to make changes to their plans either this year or in 2017 by adding a high-deductible plan option (52%), increasing the employee contribution percentage (56%) or increasing co-insurance features (55%).

In more positive news for employees, employers also say they are focusing their attention away from just the physical health of their employees and making strategic changes to plans that address chronic condition management and mental, financial and social well-being.

For example, 51% of companies expect to increase wellness offerings, and 37% say they will add wellness incentives or penalties to their programs in 2016. Employers also say they are planning to add voluntary benefits offerings, including critical illness and accident insurance, as a way to help offset an increased financial exposure faced by employees as high-deductible health plans become the norm.

But in addition to avoiding the Cadillac tax, employers also say they’re eyeing benefits changes as a way to secure key talent in their organizations. According to the report, 62% of executives say attracting and retaining talent is a top concern, up from 45% last year. And they see enhanced benefits packages as a way to do so, Gowen says.

“The key takeaway is that employers will look at any and every option to help them manage costs while offering a benefits package that is attractive, improves worker health and increases employee productivity.”

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