Most Employers Plan To Continue To Offer Health Benefits Despite ACA Changes

Most employers plan to continue providing health care benefits, even with the changes required by the Patient Protection and Affordable Care Act (ACA), according to the Willis Health Care Reform Survey 2014. The survey found that 60 percent of employers rated “moving away from benefit engagement” as extremely unlikely, and another 17 percent of employers rated it as somewhat unlikely. In fact, employers view providing health care benefits as an important part of their compensation offerings and are taking steps to manage costs so they can continue to offer benefits to their employees.

In efforts to manage costs, almost half of companies have already increased, or plan to increase, dependent coverage contributions at a higher rate than employee-only coverage, Willis noted. In addition, 35 percent of employers have already applied, or plan to apply, a surcharge on spousal coverage (or exclude coverage) when spouses have coverage available through their own employer. In 2014, 14 percent had already eliminated coverage for part-timers, and another 8 percent plan to do so in the future.

Although health care reform is a top concern for many organizations, a minority have actually taken the time to consider its cost impact, according to the survey. Only 37 percent of respondents have identified the cost impact of the ACA for their health plans in 2014. Of the employers that have measured the cost impact, 54 percent said they experienced a cost increase between 0 percent and 5 percent. Eleven percent said they experienced more than a 10 percent increase in cost, while 13 percent said they experienced no change in cost.

Employer mandate. The requirement that employers provide health insurance to workers or pay a penalty was delayed until 2015 for employers with 100 or more full-time employees and until 2016 for employers with 50 to 99 full-time employees. The Willis survey found that most employers noted that the announcement of the delay came too late for them to adjust their strategies, and 69 percent of employers indicated that the announcement did not have a major impact on their benefit plan decisions.

To avoid paying a penalty under the employer mandate, companies must offer coverage that is affordable for workers. Seventy-nine percent of employers have determined that none of their employees pay more than 9.5 percent of their earnings for single coverage for the lowest cost plan option (i.e., the affordability test), noted Willis. Another 14 percent have yet to apply the test, and 7 percent have determined that they do have employees who are paying more than 9.5 percent of earnings for their lowest cost plan option.

Most employers have not yet established a method to determine how to calculate if an employee is or is not a full-time employee under the ACA. The ACA provides two methods for measuring full-time status: the monthly measurement method or the “look-back” measurement method. The survey found that half of respondents have not determined what measurement period they will use, while 34 percent said they will use the look-back method.

Exchange strategies. Most employers have not yet developed strategies to address providing coverage through a private or public exchange. Only 4 percent of respondents replied that they have well-developed strategies for either type of exchange. Strategy development is consistent for both private and public exchanges, noted Willis, with over 40 percent of companies indicating that they do not have a strategy and just under one-third indicating that a strategy is not being considered at all.

Excise tax. In 2018, a 40 percent excise tax will be imposed on high-cost health plans. This so-called “Cadillac tax” concerns many employers. Forty-one percent of respondents have identified its impact: 22 percent are taking steps to minimize the impact of the excise tax, while another 19 percent have not yet identified steps they will take in order to avoid the tax. Willis noted that since many other aspects of the ACA have been delayed or modified, many employers are of the opinion that the excise tax also will be delayed or eliminated altogether.

The survey was conducted during January 2014 and contains responses from 1,033 employers. For more information, visit http://www.willis.com/documents/publications/Services/Employee_Benefits/20140606_Willis_Health_Care_Reform_Survey_Report_2014.pdf.

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