New International Foundation Survey Finds Majority of Employers Believe ACA Has Had a Negative Impact on Their Company

BROOKFIELD, Wis., June 11, 2014 /PRNewswire-USNewswire/ -- More than half of single employers believe that the Affordable Care Act (ACA) has had a negative effect on their company, according to a new 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 Affordable Care Act 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 ACA and the health care law's challenges and opportunities. The survey specifically looks at 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 (aka 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 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 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 report they are very or somewhat likely to continue providing coverage. Less than one 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 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 percent of employers with more than 10,000 employees taking action to avoid the excise tax.

On April 17, 2014, the International Foundation deployed its fifth survey in a series on how single employer plans are being affected by ACA. Participants of the 2014 survey were single employer plans (including corporations) in the databases of the International Foundation and the International Society of Certified Employee Benefit Specialists (ISCEBS). Survey responses were received from 691 human resources and benefits professionals, and industry experts. The surveyed organizations represent a wide base of U.S. employers from nearly 20 different industries. For complete results and more information on the report 2014 Employer-Sponsored Health Care: ACA's Impact, please visit: www.ifebp.org/ACA2014.

About the International Foundation of Employee Benefit Plans
The International Foundation of Employee Benefit Plans is a nonprofit organization, dedicated to being a leading objective and independent global source of employee benefits and compensation education and information. Total membership includes 33,000 individuals representing multiemployer trust funds, corporations, public employer groups and professional advisory firms throughout the United States and Canada. Each year, the International Foundation offers over 100 educational programs, including conferences and e-learning courses. Membership provides access to personalized research services and daily news delivery. The International Foundation sponsors the Certified Employee Benefit Specialist® (CEBS®) program in conjunction with the Wharton School of the University of Pennsylvania and Dalhousie University in Canada.

SOURCE International Foundation of Employee Benefit Plans