As employers digest the tenets of the Patient Protection and Affordable Care Act, most have not taken drastic measures to avoid triggering certain requirements of PPACA. Small employers have shown a stronger tendency to take actions such as freezing hiring or cutting back on fulltime workers to remain under the 50-employee trigger. But even small employers aren’t acting en masse to skirt the act.
That’s the big picture finding from a survey of nearly 700 HR professionals by the International Foundation of Employee Benefits Plans. While about half the respondents said the act has negatively impacted their business, most haven’t taken steps to avoid compliance. Instead, they are taking cost-cutting measures by transferring more responsibility for health insurance payments to their employers.
See also: CBO claims PPACA will slash work hours
The report, 2014 Employer-Sponsored Health Care: ACA’s Impact, found that 41 percent said the act has already had a “somewhat negative effect” on business, and 13 percent reported that the effect was “very negative.” At the other end of the spectrum, 3 percent actually found its effect “very positive,” and another 43 percent said it had either a somewhat positive effect (8 percent) or a neutral effect (35 percent).
When asked what measures they were taking to mitigate the effect of PPACA, survey respondents said:
- 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 20 percent have increased copayments or coinsurance for primary care and/or increased employee proportions of dependent coverage costs; and
- More than 40 percent of employers expect to see the greatest cost increases due to PPACA in 2015.
Wellness plans are gaining the attention of more employers as evidence begins to surface that such plans do offer benefits to the employer. About 20 percent said they have added or expanded wellness programs as a result of the PPACA’s implementation, and another 22 percent said they’d do so within the next 12 months. About 10 percent are now offering the incentives approved by the act, and 20 percent are considering doing so.
Asked to cite what they believe will be the major cost elements of the act in the future, they pointed to costs associated with the Cadillac tax (high-cost group health plan excise tax), general PPACA administrative costs and transitional reinsurance fee costs.
“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,” the survey said.
Asked to describe actions they’ve taken to adjust their workforce in light of the act, the survey found that most large plan employers hadn’t made drastic workforce adjustments. Smaller employers reported some movement toward workforce adjustment:
- Nearly one in six has reduced their 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; and
- One in 10 has cut back on hiring in order to stay under 50 employees.
Fears that employers large and small would somehow try to discontinue health coverage for employees were not borne out by the survey. “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,” the Foundation said. “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.”