A Willis Towers Watson (WTW) survey has revealed that two-thirds of employers expect increases in employee benefit plan costs over the year, and 60 percent of companies suggest the increases in healthcare costs will be moderate or significant.
In response to the survey, Mark Cook, senior director of global services and solutions, and Paul McNiff, director of global services and solutions consulting business, at WTW look at how employee benefit captive owners are using their captive programmes to help respond to the COVID-19 pandemic.
The survey found that while around 80 percent of companies are expecting healthcare costs to increase over the next year due to COVID-19, only around one quarter were planning to increase the premiums of the plans in the captive.
Cook and McNiff suggested that many companies are looking to use their captive to help manage cost impact for the local entities who are paying the premiums.
The report highlighted that over 90 percent of the survey participants have conducted an assessment of whether their benefit plans have any exclusions concerning COVID-19, but only one-third of companies have completed that assessment for all countries.
It also outlined that only one in five employers have no gaps in their global portfolio, meaning that most employers have populations of employees that may be exposed to restrictions in access to their health, life or disability benefits as a result of COVID-19.
Looking at gaps in coverage on their local plans due to COVID-19 related risks, over 70 percent of companies have considered how to deal with these gaps, according to the survey.
Half of employers that participated in the survey indicated that they were providing ex-gratia claims coverage for policies where life, disability or medical benefits were excluded in the event of a pandemic; and 80 percent of these companies were using their captive to fund these claim payments.
Additionally, the report showed that almost two-thirds of employers were providing additional access to employee assistance programmes or telemedicine, with around 40 percent of those using the captive as the tool to fund those initiatives.
Cook and McNiff explained that while nearly nine out of ten captive sponsors expect their captives’ claims exposure to increase due to COVID-19 related risks, only 14 percent believed that it was likely to be significant.
“It was worth noting that nearly 60 percent of participants have some form of protection strategy in place that can help limit exposure to downside risk if claims experience is more adverse than expected”, Cook and McNiff added.
“Our survey results demonstrate that companies which have implemented an employee benefits captive model are utilising it to further support the business and its employees in response to COVID-19.”