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How employers are responding to the Affordable Care Act

Michelle Hicks WEBThe International Foundation of Employee Benefit Plans recently released the findings from its fourth survey about how employer health plans are affected by the Patient Protection and Affordable Care Act. The survey asked employers a variety of questions, from how it affects their benefit strategies to how they are communicating about it with employees. It surveyed employers from 20 different industries ranging in size from fewer than 50 employees to more than 10,000.

The findings are interesting – including the number of employers committed to continuing to provide coverage after the federal Health Insurance Marketplace and the state health insurance exchanges, including Your Health Idaho, open on Oct. 1. The majority of those surveyed, 94 percent, said they intend to continue providing coverage. Most employers reported that their plans meet the minimum value (81 percent) and affordability (74 percent) requirements of the act.

Less than 1 percent of respondents said they would discontinue coverage. Of those that are discontinuing coverage, two-thirds say they are somewhat likely to offer to pay employees a subsidy so they can purchase coverage on their own. Few employers plan to drop spousal coverage.

As far as the cost effect of the act on employer health plans, 64 percent say the law is resulting in a 3 percent to 4 percent cost increase in 2013. Extending coverage to adult children until the age of 26 was said to be the greatest cost driver. About one-quarter of the plans expect to increase participant costs in the next two years, and a little less than one-quarter plan to increase what employees pay to cover dependents. Some employers (17 percent) are already starting down the path of redesigning their health plans to avoid triggering the so-called Cadillac tax in 2018: an excise tax on high-cost health plans, which many employers cite as a significant health care cost driver in the future.

Few organizations are changing their workforce hiring or reduction strategies as a result of health care reform, although 16 percent have adjusted or plan to adjust hours so fewer employees qualify as full time, meaning they work 30 or more hours a week. Employers with 50 or fewer employees are taking the most actions. Of those, about 20 percent are reducing hiring to stay under the threshold of having to comply with the act, while another 20 percent are reducing hours so fewer employees qualify as full-time.

Two in five employers are increasing their wellness initiatives due to the effects of health care reform. As far as plan designs go, one-quarter of employers are increasing their emphasis on high-deductible health plans with a health savings account, while 14 percent are considering adding one and 18 percent are increasing their emphasis on high-deductible plans with a health reimbursement arrangement.

Employers are stepping up their game when it comes to communicating with employees about health care reform and its implications. Organizations are communicating with employees via email (41 percent) and using websites (30 percent) throughout the full year, and not just during open enrollment.

While a lot of news headlines imply employers are getting out of the health insurance game, this survey shows very few are taking such actions. As the exchanges roll out, it will be interesting to see if employers who say they don’t intend to drop coverage actually do – especially as the 2018 excise tax looms.

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Michelle Hicks, a senior professional in human resources, is a director in the communication practice of Buck Consultants, a Xerox company. 

About Michelle Hicks