Employers Say 2016 Will Be the Costliest Year Yet for ACA Compliance

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Employers Eying Cost-Saving Options Like HDHPs to Curb Rising ACA Costs Says New International Foundation of Employee Benefit Plans Survey

ACA Administration Issues the Biggest Challenge for Employers
82%: The number of employers who say ACA will increase their 2015 health care costs.

The Affordable Care Act (ACA) has brought increased health care costs to many employers, but a new survey finds the majority of organizations believe the largest cost increases are yet to come.

One-third of employers (33%) expect the greatest cost increase from ACA implementation to take place in 2016, according to a new survey, 2015 Employer-Sponsored Health Care: ACA’s Impact, conducted by the International Foundation of Employee Benefit Plans. Just over one-quarter (27%) expect the largest cost increase in 2018.

Twenty percent state the impending excise tax, or Cadillac tax, will be their future top cost driver, followed by general administrative costs (19%) and costs associated with reporting, disclosure and notification requirements (13%).

“Employers need to devote significant time and energy to maintain compliance with the law,” explained Julie Stich, CEBS, director of research at the International Foundation. “The extensive amounts of data that employers are required to collect can take hours of manpower and even require complex IT infrastructures. The process has meant a cost increase for many, especially smaller organizations.”

Most employers (71%) think the costliest years are yet to come, but that doesn’t mean they aren’t already feeling a financial impact. Eighty-two percent say the law is increasing their organization’s costs this year, with most projecting a 1% to 6% increase.

“Interestingly, we have seen a trend of employers continually anticipating the worst, where each upcoming year looms with the largest costs. In 2014, the majority felt 2015 would bring the largest costs. In 2015, 2016 seems to be the worst,” said Stich.

The unknown outcome of the pending ACA Supreme Court case, King v. Burwell, adds to employers’ uncertainties about the future. Nine in ten organizations say they are following the discussion surrounding this case.

High-Deductible Health Plans a Popular Option for Controlling ACA Costs

Employers are taking a number of steps to help control costs due to the Affordable Care Act. A significant number report that, due to the law, they have increased their emphasis on, have added or are considering adding a high-deductible health plan (HDHP). Forty-two percent have or are considering an HDHP with a health savings account (HSA), 13% an HDHP with a health reimbursement arrangement (HRA) and 11% an HDHP with no account.

Nearly one in ten organizations has adopted a full-replacement HDHP due to ACA, and an additional 19% are considering doing so.

“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. “As employers face the upcoming Cadillac tax, it’s likely that HDHPs will continue to gain popularity.”

The survey found that just over half of the employers are on pace to trigger the Cadillac tax in 2018, but only 3% actually plan to pay the tax. Of those looking to avoid the tax, 53% have added or plan to add a high-deductible health plan. Thirteen percent report they will not incur the tax because they have already taken action to avoid it.

No Plans to Stop Offering Health Care

Despite the three in five respondents who feel the law has had a negative impact on their organization, nearly all employers (96%) anticipate they will be continuing to offer health care coverage five years from now.

“Health care benefits are seen as essential for attracting future talent and retaining current high-quality employees,” said Stich. “Employers may change the structure of their health care plans or shift some of the cost burden to their employees, but it doesn’t appear they will stop offering health care benefits anytime soon.”

About the Survey

2015 Employer-Sponsored Health Care: ACA’s Impact was conducted in March 2015 and is the sixth survey in a series on how single employer plans are being affected by the Affordable Care Act. Responses were received from 598 human resources and benefits professionals in the databases of the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialists (ISCEBS). The organizations represent a wide base of employers from nearly 20 industries and range in size from fewer than 50 employees to more than 10,000.

Download the full survey report at http://www.ifebp.org/ACA2015.


The International Foundation of Employee Benefit Plans is the premier educational organization dedicated to providing the diverse employee benefits community with objective, solution-oriented education, research and information to ensure the health and financial security of plan beneficiaries worldwide. The Foundation has more than 33,000 multiemployer, corporate and public sector members representing over 25 million lives. For additional information, visit http://www.ifebp.org.

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