Employers Cite Negative Impacts from ACA

June 11, 2014 (PLANSPONSOR.com) – Many employers believe the Patient Protection and Affordable Care Act (or ACA) has negatively impacted their companies, a survey finds.

More than half of employers surveyed by the International Foundation of Employee Benefit Plans say the ACA has negatively impacted their companies overall, and two-thirds believe it will negatively impact their companies in the future. More than two in five employers expect to see the greatest cost increases due to ACA in 2015, and costs associated with the excise tax on high-cost group health plans (a.k.a., the Cadillac tax), general ACA administrative costs and transitional reinsurance fee costs are predicted to be the top three ACA cost drivers beyond 2014.

The survey report, “2014 Employer-Sponsored Health Care: ACA’s Impact,” shows employers are passing costs to employees:

  • Nearly one-third of employers have increased out-of-pocket limits, increased participants’ share of premium costs and/or increased in-network deductibles; and
  • More than one in five have increased copayments or coinsurance for primary care and/or increased employee proportions of dependent coverage costs.

 

According to the report, the majority of large employers have not made broad workforce adjustments due to ACA. However, many smaller employers (i.e., those with 50 or fewer employees) have made changes due to the increasing costs associated with ACA, including:

  • Nearly one in six have reduced their work force;
  • More than one in 10 have reduced hours so fewer employees work full time;
  • More than one in 10 have frozen or reduced pay raises and compensation; and
  • One in 10 have cut back on hiring in order to stay below 50 employees.

“We are seeing firsthand how the Affordable Care Act has had major implications on employers and their employees,” says Michael Wilson, CEO of the International Foundation. “Employers are taking a variety of actions to mitigate costs and in most cases are sharing the cost impact with their work force.”

Despite these findings, nearly three-quarters of respondents say they will continue to provide health care coverage for all full-time employees in 2015. This represents an increase since 2012, when this figure was below half. More than one in five employers say they are very or somewhat likely to continue providing coverage. Less than 1% of respondents stated they will discontinue coverage to all full-time employees in 2015.

The survey also finds one-quarter of employers have already started to redesign their health plan to avoid triggering the 2018 excise tax, also known as the Cadillac tax. More than one-third of employers are considering this action. Larger employers are particularly likely to be taking this action, with nearly 40% of employers with more than 10,000 employees taking action to avoid the excise tax.

The foundation conducted the survey during April, looking at single employer plans (including corporations) in the databases of the foundation and the International Society of Certified Employee Benefit Specialists (ISCEBS). Survey responses were received from 691 human resources and benefits professionals, and industry experts. The surveyed organizations represent a wide base of U.S. employers from nearly 20 different industries.

More information about the survey results can be found here.

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