Businesses Struggle to Meet Employer Sponsored Health Plan Expectations

As businesses struggle to cover the costs of employer-sponsored health plans, employees want better options and more control over their coverage choices, according to an eHealth survey.

eHealth surveyed 1,300 people, including over 1,000 employees and more than 250 owners or managers of small to medium-sized businesses, in September 2022.

The majority of employers were aware of the importance of offering health insurance to their employees, with 94 percent agreeing that supporting employee health coverage helps them hire and retain the best workers.

However, the cost of employer-sponsored group health insurance has become an issue for many employers. More than half of employers (57 percent) that do not currently offer coverage said they would extend coverage to their employees if they could afford it.

Additionally, 60 percent of employers that offer coverage said the biggest challenge is the cost of monthly premiums. Almost 20 percent cited uncertainty about future costs as a challenge, while 12 percent said finding the right plan for their employees is challenging.

Four in ten employers reported struggling to afford the overall costs of offering health insurance for employees. Meanwhile, 11 percent said they may have to stop offering coverage because they cannot afford it.

Most employers (87 percent) agreed that they would prefer to help their employees access health insurance without sponsoring a group health plan. One possible way to achieve this is through individual coverage health reimbursement arrangements (ICHRAs).

ICHRAs are account-based health plans that allow employers to set aside tax-free funds for employees that cover qualified medical expenses, such as monthly premiums and out-of-pocket costs.

According to the eHealth survey, 64 percent of employers said they did not know about ICHRA products that would provide an alternative to offering group coverage.

As employers face challenges with offering coverage, employees are not satisfied with their plan choices.

Almost three-quarters of employees thought employers prioritized their own needs when selecting health plan options for workers. Similarly, 60 percent of employees said their health plan choices were not aligned with their personal needs. Only 20 percent said their employer understood their healthcare needs well.

Employees expressed frustration regarding their limited employer-sponsored health plan choices (57 percent) and said they would need to review at least six to ten options if they were selecting their own plan.

Almost half of the employees reported that their employer offers only one or two health insurance plans, 41 percent said they are given between three and four choices, and 9 percent said they have five or more options.

Most employees (90 percent) think that people should be able to take their health coverage with them when they leave a job, the survey found. In addition, 74 percent would prefer to choose their own health plan based on what is available in their area instead of picking from their employers’ options.

Ensuring employees are satisfied with their employer-sponsored health coverage can help improve overall job satisfaction. Among individuals who had previously worked for an employer that did not offer healthcare coverage, 59 percent said the lack of coverage made them less satisfied with their job.

Employer-sponsored health plans have excelled in some areas, according to their members. An AHIP survey revealed that consumers had positive experiences with their plan’s mental and behavioral healthcare support during the COVID-19 pandemic. Nearly 90 percent of employees who accessed mental or behavioral healthcare said they felt satisfied with the help they received.

Large employers plan to expand mental healthcare offerings in their 2023 employer-sponsored health plans, a Business Group on Health report found.