Health Care Reform Drives Replacement of PPO’s

funeral PPO’s – RIP

“When J.C. Penney Co. replaced its preferred provider organization health plan with a high-deductible health plan for all benefits-eligible employees in 2010, it was one of the few large employers to make what is known as a “full replacement” of its health plan.”

More Companies Consider Moving To Single Offering For Health Care Benefits

By Joanne Wojcik

When J.C. Penney Co. replaced its preferred provider organization health plan with a high-deductible health plan for all benefits-eligible employees in 2010, it was one of the few large employers to make what is known as a “full replacement” of its health plan.

But the Plano, Texas-based retailer soon could have lots of company, as more than half of employers may make HDHPs their sole health plan offering by 2018, replacing health maintenance organization plans and preferred provider organization plans.

While the rising cost of health benefits has driven this movement, the health care reform law’s excise tax on high-cost health coverage in 2018 is accelerating the migration to full-replacement HDHPs, benefits consultants say.

Separate surveys conclude that high-deductible plans will be the only offering by one-quarter to one-half of employers in the coming years.

The larger the employer, the more likely they are to consider going full-replacement, Mercer L.L.C. found, with 29% of employers with at least 20,000 employees saying that a high-deductible plan will be their only health insurance option offered to some employees in the next three years.

“For Fortune 500 companies, that number grows to 33%,” said Sander Domaszewicz, a senior consultant and leader of Mercer’s U.S. consumerism practice based in Irvine, California. “Among Fortune’s 100 Best Places To Work, it was 30%.”

This compares with just 12% of employers with 500 to 999 employees; 18% of employers with 1,000 to 4,999 employees; 21% of employers with 5,000 to 9,999 employees; and 17% of employers with 10,000 to 19,999 employees, according to the Mercer survey.

 

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