Employers Say 2016 Could Be Very Costly
The Affordable Care Act has caused many employers to pay more in health care costs. However, many organizations are anticipating even higher costs in the coming year. A new survey conducted by the International Foundation of Employee Benefit Plans has revealed this.
The Survey Report
According to the survey report, one-third of the employers expect to pay the highest amount of price increases in 2016 with the implementation of new requirements for reporting, notification and disclosure. There are even some employers that expect to pay the highest increase in costs in 2018. This is because of the Cadillac tax.
Top Compliance Cost Drivers
The employers were asked what they think is going to be the top drivers of cost. One response was the excise tax on plans of high-value. Another response was the costs of general administration. The third response was the reporting, notification and disclosure requirement costs.
Compliance with the Law
Employers are required to set aside a significant amount of time in order to comply with the law. Employers are required to collect tons of data to the point that it could take hours out of their day. This may even require complex infrastructures of IT. Smaller organizations are especially affected by the increase in costs.
The Highest Costs are Coming
71% of employers believe that the most expensive years have not arrived yet. However, this does not take away from the financial impact that they are feeling. 82% have stated that there are already a lot of increases in the costs of their organization in this year. Most are expecting a 1 to 6 percent increase in expenses related to compliance.
Controlling Costs Options
There are efforts and steps being taken by employers to control the costs that are affected by the ACA. Many have stated that the law has influenced them to consider High-deductible health plans. This allows for lower premiums compared to other plans, and can help employers stay away from excise taxes.
HSAs and HRAs
More than Forty percent of employers are looking at an HDHP accompanied by a health savings account. A little over 10 percent of employers are looking at an High-deductible health plan accompanied by a health reimbursement arrangement. There are also a portion of employers that are looking at HDHPs with no accompanying account. The HRAs are funded by employers with HSAs having the ability to be funded by employees and employers.
Full Replacement Approach
Approximately one out of every ten organizations has used a full-replacement strategy for HDHP. This is where the only plan options provided are HDHPs. This helps them avoid the excise tax.
The Popular Option
The popular choice for employers is high-deductible health plans. This allows employers to be better able to handle both health care costs of the present and the future. HDHPs are continuing to become popular with the coming “Cadillac Tax”.
The Excise Tax
According to a survey, more than 50% of the employers are headed towards the excise tax in 2018. However, the people that are planning to pay the tax are only three percent. The employers that are trying to avoid the tax are looking for plans. 53% of them have added the HDHP.
Health Care Stays
Even considering the majority of the respondents who feel the law is negatively impacting the business, there are still plans from all employers to continue to offer health care coverage for years to come. Health benefits are essential for future employees. High-quality employees are going to be looking for health care plans. Employers do have the option of altering the health care plan structure or shift some of the costs to their employees.
The survey was conducted with HR and other professionals for benefits in March of 2015. The survey was conducted in the databases for the International Foundation of Employee Benefit Plans as well as the International Society of Certified Employee Benefit Specialists. A wide range of employers in almost 20 industries have been represented by these organizations.
Avoid Tax Penalties
Companies are scrambling to provide health care to their employees in order to avoid major tax penalties. The ACA had impacted the business landscape forever. Only time will tell how many industries, employees and employers are affected, and to what degrees each will benefit – or suffer.
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