Majority Of Employers Believe ACA Has Had Negative Impact On Their Company

More than half of single employers believe that the Patient Protection and Affordable Care Act (ACA) has had a negative effect on their company, according to a recent report from the International Foundation of Employee Benefit Plans. Nearly 90 percent of employers expect ACA to increase their company’s health care costs in 2014, resulting in many employees seeing higher out-of-pocket costs and increased premiums and deductibles.

“We are seeing firsthand how the ACA has had major implications on employers and their employees,” said 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 workforce.”

The report, 2014 Employer-Sponsored Health Care: ACA’s Impact, analyzes employers’ concerns with the ACA and the health care law’s challenges and opportunities. The survey specifically examined plan design and funding, methods for communicating with employees, reactions to health insurance exchanges, cost management initiatives, potential impact on health care benefit costs, and more.

Notable changes related to health insurance plans for employees and expected cost adjustments from employers include:

• Nearly one-third of employers have increased out-of-pocket limits, increased participants’ share of premium costs, and/or increased in-network deductibles.
• More than one in five have increased copayments or coinsurance for primary care and/or increased employee proportions of dependent coverage costs.
• More than two in five employers expect to see the greatest cost increases due to ACA in 2015.
• Costs associated with the excise tax on high-cost group health plans (known as 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 report finds that the majority of large employers have not made broad workforce adjustments due to the ACA, but many smaller employers, those with 50 or fewer employees, have made changes to their workforce due to the increasing costs associated with the ACA. According to small employers, these changes include:

• Nearly one in six has reduced their workforce.
• More than one in ten have reduced hours so fewer employees work full-time.
• More than one in ten have frozen or reduced pay raises and compensation.
• One in ten has cut back on hiring in order to stay under 50 employees.

“Despite the majority of employers finding the implementation of ACA to have a negative effect on their company, there have been several positive opportunities as well. Many employers have taken action to increase awareness and communicate with their employees about ACA, which has resulted in greater participant engagement with their health care benefits,” said Julie Stich, director of research at the International Foundation. “In addition, most employers will continue to provide health care benefits in order to retain current staff, attract future talent, and maintain or increase employee well-being.”

Overall, nearly three-quarters of respondents will continue to provide health care coverage for all full-time employees in 2015, representing a steady increase in confidence in employer-sponsored coverage since 2012 when this figure was below half. More than one in five reported that they are very or somewhat likely to continue providing coverage. Less than 1 percent of respondents stated they will discontinue coverage to all full-time employees in 2015.

Looking ahead, one-quarter of employers have already started to redesign their health plan to avoid triggering the 2018 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 percent of employers with more than 10,000 employees taking action to avoid the excise tax.

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