Just One-Third Of Organizations Have Quantified Cost Of ACA

Just 31 percent of organizations have quantified the cost of the Patient Protection and Affordable Care Act (ACA), according to recent research from Arthur J. Gallagher & Company (AJG). Among those that have quantified the cost impact of the ACA, 42 percent expect to see costs increase by at least 6 percent in 2014, and 26 percent expect costs to increase by 10 percent or more. In addition, 90 percent of employers reported having no written total rewards or strategic benefits plan with measureable objectives.

However, AJG noted that while a lack of strategic preparedness is a problem for most survey respondents, the decision to drop health care benefits has barely surfaced. Most (98 percent) employers are unwilling to completely eliminate employer-subsidized medical benefits. But, to help control costs, 73 percent said that they would be more likely to reduce health care perks than to decrease or freeze compensation (27 percent).

“Although organizations may be aware of the changes that are shaping the future of the employee benefits market, the survey suggests that many are not yet ready to face the challenges these changes will bring,” said James W. Durkin, Jr., president of the Employee Benefit Consulting and Brokerage. “Those that adequately adapt to the current reality will optimize their ability to mitigate future costs.”

Controlling costs. AJG’s 2014 Benefits Strategy & Benchmarking Survey, which contains responses from 1,833 organizations, found that the two biggest challenges confronting employers are the need to control benefit costs while attracting and retaining a competitive workforce. Some of the leading strategies identified by for containing benefit costs include:

• increasing employee plan contributions (54 percent);
• increasing deductibles (43 percent);
• increasing out-of-pocket maximums (36 percent);
• increasing copayments (30 percent).

“There’s no doubt that the changing benefits landscape will present organizations with complex challenges for years to come,” said Durkin. “A holistic, innovative, data-driven employee benefits strategy is needed to strike the optimal balance in managing the best interests of employees and employers. This approach allows organizations to respond to change with agility, helping them to minimize risk, maximize rewards and drive growth.”

For more information, visit http://www.ajg.com/media/1089295/2014-benefits-strategy-and-benchmarking-survey-executive-summary.pdf.

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