Employers Adjusting for Additional Costs from PPACA

June 11, 2012 ( - Nearly half of all employers (47.2%) have conducted an analysis to determine how health care reform legislation will impact their health care plan costs.

By Rebecca Moore | June 11, 2012
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A majority of organizations (69.6%) expect the legislation will raise their costs this year, according to the Health Care Reform: 2012 Employer Actions Update survey from the International Foundation for Employee Benefit Plans. One-quarter (25.6%) estimate the legislation will increase their costs by 1% to 2%, followed by one-fifth (19.8%) estimating cost increases of 3% to 4%. Employers that have not conducted an analysis of plan costs are slightly more likely to estimate cost increases.  

Of provisions currently in place, extending coverage to adult children until age 26 was listed as the top cost driver (38.7%). The nondeductible excise tax on high-cost health plans in 2018 (19.6%) was cited as the top forthcoming cost driver.  

Approximately 14% of responding employers are anticipating making a change in their funding approach with their primary medical plan due to changes imposed by health care reform. Most organizations anticipating funding changes are adding stop-loss insurance.  

Increasing participants’ share of premium costs, done by more than one in five respondents (23.1%), is the most common technique used to address cost increases caused by health care reform. Going forward in the next two years, 20.1% of employers plan to increase employees’ proportion of dependent coverage cost to address cost increases.