Full coverage of preventive services will drive up costs for employer-sponsored health coverage, according to professional services company Towers Watson.
Under new health reform law, health plans that exist on or after Sept. 23 will be required to cover preventive services without charging co-pay, co-insurance or a deductible.
Plans that existed on or before March 23 are considered "grandfathered" plans and are exempt from some new requirements. Many employer-provided health plans have promoted low-cost or no-cost preventive care for years, but the new law broadens the range of services covered and establishes a uniform standard for services grounded in the recommendations of the United States Preventive Services Task Force and other similar bodies.
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But over the next few years, it may be hard to find a health plan that kept grandfather status. In fact, research from Towers Watson shows less than half of large employers will retain grandfathered status since most will be making plan design and contribution changes that will exceed the limits permitted by the grandfathered plan rules.
A separate survey by Hewitt Associates found almost all U.S. companies will lose grandfather status by 2014.
Implementing new preventive care benefits means insurers and employers will face cost increases of 1 percent to 2 percent, according to Towers Watson. With an annual 2010 average per covered employee health cost of just over $10,000, this means employers will see an increase of $100 to $200, which will be in addition to expected average annual cost increases of 8 percent to 10 percent.
Many employers will be scrambling to communicate these new benefits to employees in time for open enrollment in early fall. Insurers and administrators will face the additional challenge of modifying their claim payment systems by Jan. 1 or establishing processing guidelines for their examiners.
"Because there has not been a single standard for the administration of preventive benefits, many employers have taken it upon themselves to define these benefits," says Greg Mansur, senior health care consultant with Towers Watson. "This adds to the complexity of implementation for many regional and national claim payers, and employers should really take the time not only to understand the impact on their plans, but also to test their administrator's capabilities before Jan. 1."
Under the provision, insurers and self-funded health plans must cover regular wellness visits based on the patient's age and gender as well as a range of recommended screenings. New additions to coverage for most employees and their families will include depression, supplemental pregnancy, and HIV and other sexually transmitted diseases screenings as well as HPV tests for females. It also includes recommendations to take aspirin to prevent heart disease and fluorides for children.
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