BHCG Monitor: Focus on Health Care Benefits

August 2016

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BHCG Monitor: Affordable Health Care Act – Notable News


Affordable Health Care Act – Notable News

Employers React to ACA’s Impact in New Survey

A recent International Foundation of Employee Benefit Plans survey has found three out of five employers (61 percent) feel the Affordable Care Act (ACA ) has had an overall negative impact on their organizations.  However, when asked if they would like to see the ACA repealed entirely, 44 percent were opposed, 35 percent were in favor and 20 percent were unsure.

Citing general ACA administrative costs as well as those associated with ACA reporting requirements, cost containment and Cadillac tax avoidance strategies, 77 percent of the surveyed employers expect the law to increase their health care costs this year. In addition, communicating with employees about the ACA is an issue with which employers grapple.

The 2016 Employer-Sponsored Health Care: ACA’s Impact survey is the seventh annual survey the International Foundation of Employee Benefit Plans has conducted that focuses on the most important health care reform issues employers face. This year 446 human resources and benefits professionals and industry experts responded, representing an array of employers (ranging in size from fewer than 50 to more than 10,000 employees) from nearly 20 different industries.

A variety of topics were addressed in the survey. Here are a few more of its key findings:

General ACA reactions

More than four in five employers who said their organization’s view of the ACA has changed since its enactment, reported their view has become more negative. If the ACA is repealed, a majority of surveyed employers (58 percent) believe a new health care reform bill will take its place in the next four years.

Employers were asked which of the ACA provisions they would most like to keep if the law were repealed. The elimination of preexisting condition exclusions came out on top with 38 percent of employers selecting it as their first choice, followed by coverage of adult children to age 26 and allowing increased wellness incentives (tied at 31 percent each) and no cost sharing for preventive care at 25 percent.

Less than three percent of surveyed employers are considering discontinuing providing health care coverage for full-time employees over the next five years.  Of those offering coverage, less than five percent provide it through private health insurance exchanges. However, retiree coverage is a different story with 14 percent of employers providing retirees with coverage via private exchange and an equal percentage considering the option.

Employee communications and reporting

Despite the existence of mandated ACA communication efforts, two in five employers believe employee ACA understanding is poor or very poor. What’s more, only three in 10 employers believe the law has had a positive effect on employee engagement in health care. More than half of organizations cited an increase in ACA-related questions directed to HR and benefits staff – many of them regarding 1095 tax forms and tax filing.

A majority of organizations surveyed (53 percent) see ACA reporting requirements as their biggest ACA challenge. Meeting deadlines, identifying who is to be reported, collecting information and understanding the forms were identified as top issues for employers. More than two-thirds reported a significant financial impact due to reporting and disclosure requirements.

Employer strategies to address costs

Organizations reported having employed a number of strategies to address costs in response to the ACA, such as increasing: out-of-pocket limits (37 percent), in-network deductibles (34 percent), employees’ share of premium (31 percent), copayments/coinsurance for primary care (28 percent), employees’ share of prescription drug costs (25 percent) and employees’ share of dependent coverage cost (24 percent). Additionally, some employers have adjusted hours (11 percent) to avoid the ACA definition of full-time (30 hours per week/130 hours per month), reduced their workforce (four percent) or their hiring (three percent) in order to stay under 50 employees.

The ACA has also led to one in five employers implementing or upgrading wellness programs and another 15 percent expect to do so in the next year. One in six is offering the maximum incentives allowed under the law.

Response to the Cadillac tax

Although implementation of the excise tax on high-cost health plans (Cadillac tax) has been delayed by two years, a majority of employers (59 percent) reported they will continue the strategies they have begun to avoid the tax. The most popular strategy cited is moving to a high deductible health plan. Twenty-five percent of respondents said they have placed more focus on or added a high deductible health plan with a health savings account and 15 percent say they are considering the strategy.


Long Awaited Final SBC Form Released

The current ACA Summary of Benefits and Coverage (SBC) template was released in April of 2013. Since then, amendments and provisions to the template have been made at various times. On April 6, 2016 the federal government released final SBC templates and accompanying documents.

The new template is shorter and allows for more flexibility in form language and formatting. It has added required definitions, certain language and terms, while deleting and changing others. Another change of note is the addition of disclosure language about minimum essential coverage, minimum value and language access services.

Plans operating on a calendar year plan must use the new SBC templates for the first open enrollment period beginning on or after April 1, 2017. The revised template, instructions, and other documents can be found here. The sample completed SBC can be found: here.

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