Regulations

Employers Expect Costs to Rise for ACA Compliance

By Robert Sheen | May 20, 2015

The Affordable Care Act has resultedpremium_increases_ahead in higher health care costs for many employers, and a new survey finds that seven out of 10 companies believe even larger cost increases are ahead.

More than 80% of those surveyed said the ACA is increasing their costs this year, with most saying the increases are in the range of 1% to 6%.

One-third of employers expect the greatest cost increase from ACA implementation to take place in 2016, according to the survey conducted by the International Foundation Benefit. Just over one-quarter expect the largest cost increase to occur in 2018.

The “Cadillac plan” tax will be the major driver of increased costs, according to 20% of those surveyed, while 19% pointed to higher administrative costs and 13% to costs associated with reporting, disclosure and notification requirements.

“The extensive amounts of data that employers are required to collect can take hours of manpower and even require complex IT infrastructures,” noted Julie Stich, CEBS, director of research at the International Foundation. “The process has meant a cost increase for many, especially smaller organizations.”

Despite concerns about the ACA’s impact on costs, nearly all employers (96%) said they anticipate that they will still be offering health care coverage five years from now.

To help control ACA-related costs, about two-thirds of the survey respondents say they have added a high-deductible health plan (HDHP) or are thinking about adding one. Most are considering an HDHP with a health savings account or a health reimbursement arrangement.

"High-deductible health plans are proving a popular option among employers that are looking for a way to hold both current and future health care costs in line," stated Stich.

The survey was conducted in March 2015. Responses were received from 598 human resources and benefits professionals. The International Foundation of Employee Benefit Plans has more than 33,000 multiemployer, corporate and public sector members with over 25 million employees.

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