Employers Say ACA Has Had a Negative Affect on Their Company

More than half of single employers say that the Affordable Care Act (ACA) has had a negative effect on their company, according to a report from the International Foundation of Employee Benefit Plans. Nearly 90% 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. Michael Wilson, CEO of the International Foundation said, “We are seeing, firsthand, how the Affordable Care Act has had major implications on employers and their employees. Employers are taking a variety of actions to mitigate costs andare sharing the cost affect with their workforce in most cases.” The following are key findings: about employers
• Nearly one-third 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.
• The top three ACA cost drivers beyond 2014 are expected to be the excise tax on high-cost group health plans (aka the Cadillac tax), general ACA administration, and transitional reinsurance fees.

The majority of large employers have not made broad workforce adjustments due to ACA, but many smaller employers, those with 50 or fewer employees, have made changes to their workforce due to the increasing costs associated with ACA. According to small employers, these changes include:
• Nearly one in six reduced its workforce.
• 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.
• One in 10 has cut back on hiring in order to stay under 50 employees.
• 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 are very or somewhat likely to continue providing coverage.

Less than 1% of respondents will discontinue coverage to all full-time employees in 2015. 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. Julie Stich, Director of Research at the International Foundation said, “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 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.” For more information, visit:www.ifebp.org/ACA2014.

Last Updated 08/10/2022

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