One in five employers expect PPACA to raise their costs

By BenefitsPro


More employers than ever expect the Patient Protection and Affordable Care Act to increase their health care costs and put a dent in their bottom line.

A new survey out Wednesday from Mercer found that employers have revised PPACA’s cost impact higher in the last two years.

In 2011, 25 percent of survey respondents expected the law would have little or no impact on their bottom line. In the most recent survey, only 9 percent expected to get off so easily. This year, 19 percent expect their costs to rise by 5 percent or more. In 2011, 15 percent saw that possibility.

Still, nearly one-third of employers still have little idea of how much the changes involved with reform will actually cost them, a statistic Mercer president and CEO Julio Portalatin called a “bit concerning.”

“The Affordable Care Act affects each organization differently as the impact on many fronts will persist well beyond the 2014 period with many variables to consider,” Portalatin said.

The employee benefits consulting firm surveyed about 900 employers nationwide to gauge their preparation for the changes taking place in 2014.

Some employers said they’re trying to protect themselves against big jumps in enrollment by raising employee contributions for coverage. Thirty percent of respondents told Mercer they’ll require workers to kick in more for dependent coverage, and 13 percent will raise the contribution level for employee coverage.

The majority of the employers (78 percent) also said they’concerned about the communication requirements associated with the new law — such as educating employees about their choices and supporting informed decision-making. Poll after poll has found the majority of Americans are confused, and largely unaware, of the changes presented by PPACA.

Tracy Watts, Mercer’s health care reform leader, said the excise tax that goes into effect in 2018 might have the biggest impact on employer-sponsored coverage, despite the fact that no one’s really talking about it. To avoid a 40 percent excise tax, employers must keep total health plan cost below a threshold of $10,200 for an individual and $27,500 for a family in 2018. To combat the tax, employers said they’re focusing on high-deductible consumer-directed health plans (either by adding a plan or taking steps to increase enrollment in an existing plan), and expanding workforce health management programs.

While few large employers plan to terminate their medical plans and send employees to the public health exchanges (just 7 percent of those with 500 or more employees), many said they’d consider using a private health exchange.

Mercer not long ago launched its private exchange, which drew dozens of carriers. Open enrollment will begin this fall with the first policies going into effect Jan. 1.

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