Published: July 29, 2010

Fidelity Investments Survey Finds Majority of Employers Rethinking Health Care Strategy Post Health Care Reform

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BOSTON - (BUSINESS WIRE) - Fidelity Investments, a leading provider of employer benefits, today announced survey results revealing that a sizable majority (84%) of employers in America expect to revisit their health care benefit strategy this year, following the passage of health care reform legislation.

The survey of 459 employers was conducted June 10 - 30 by Fidelity's Benefits Consulting group to better understand how health care reform is impacting employers and their benefit strategy.

"Company executives are taking a close look at their overall benefit strategies in the wake of the new health care reform legislation," said Sunit Patel, senior vice president of Fidelity's Benefits Consulting services. "Over the long run, health care reform could lead to significant changes to an employee's benefits well beyond health care coverage."

The study found that while the majority of employers expect health care reform to lead to cost increases, both in the short and long term, smaller employers expressed greater fear about near-term cost increases. Nearly half (49%) of smaller employers (500 employees or less) anticipate significant increases in health care costs in the short term, while just 25 percent of larger employers (500 employees or more) indicated the same concern.

"There is a lot of confusion out there about the real impact of the health care legislation and the accompanying costs," added Patel. "Depending on a company's strategy in designing its future health plans, cost increases can be minimized."

Despite Reform, Most Employers Will Continue to Offer Health Insurance

When asked if their organization is seriously thinking about no longer offering health care coverage, most employers (64%) said they were not, but 20 percent did indicate that they were in fact, considering no longer offering health care coverage. A higher percentage of smaller companies (22%) said they were seriously considering eliminating health care coverage, compared with larger employers (14%).

Employers Still View Health Care Coverage as Key Tool to Attract and Retain

Most respondents agreed that health care coverage remains an important tool to attract and retain employees. More than eight out of ten employers (85%) said that health care benefits will either continue to be just as important, or more important, in the future.

High Deductible Health Plans Seen by Many as the Plan of the Future

When asked about the health plan design that would be most attractive to their organization going forward, more than half (55%) of the larger employers chose a high deductible health plan (HDHP), followed by a preferred provider organization (PPO) (45%) and a health maintenance organization (HMO) (18%). If the respondent's organization was already using an HDHP as one of their health care options, they were more likely to consider this plan type to be the more likely option for the future, with 60 percent of this group choosing HDHP as making the most sense for their organization.

Fidelity's Benefits Consulting

Fidelity's Benefits Consulting business helps mid- to large-size employers nationwide assess the effectiveness of their benefits programs. The business provides a holistic approach to benefits design, strategy, funding, communications and delivery by looking at clients' health care and retirement plans before diagnosing business solutions. The group's specialties include retirement and health care plan consulting, custom data administration, compliance, employee communication and human resource transformation. Consulting Services has offices in Boston, New York City, San Francisco, Chicago and Dallas.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of over $3.1 trillion, including managed assets of $1.4 trillion, as of June 30, 2010. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity Investments and the Pyramid Design logo are registered service marks of FMR LLC.

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