Most employers are planning to continue offering health benefits for their employees even as the Patient Protection and Affordable Care Act is fully implemented over the next five years, according to a survey by the Midwest Business Group on Health.
Out of 111 Midwestern employers surveyed in August, only 8 percent said they intend to drop health care coverage for active employees in 2018, when the last of the federal health care reform act's provisions are expected to take effect, according to the Chicago-based business group's report. Five percent said they planned to drop coverage in 2016, and 2 percent said they would likely do it in 2015.
Nearly three quarters (70 percent) of the employers surveyed said they intended to maintain their established benefit strategy through 2013, while 16 percent said they planned to make significant changes next year to their benefit design and strategy in response to the reform law. The other 14 percent said they were waiting for more guidance on the act's final regulations before making a decision.
Diverse strategies
However, employers' strategies became much more diverse when asked to contemplate their benefits programs in 2014, when several of the law's key requirements for employers—including minimum standards for covered benefits and limitations on cost-sharing—are slated to be implemented.
"After 2013, the majority of employers responded that they will be adjusting to the 'new normal,' making changes to their benefit design strategy in response to the post-ACA environment," MBGH president and CEO Larry Boress said on Oct. 22, in a statement released with the report. Forty-nine percent of employers indicated 2014 would be the year they make significant changes to their health benefits plans, with 34 percent sticking with their existing strategies.
None of the employers surveyed indicated they planned to drop coverage in 2013 or 2014.
Coping with change
How exactly employers plan to cope with the law's effects varied substantially depending on the number of workers they employ. Only 3 percent of the 32 companies surveyed with more than 5,000 employees said they plan to drop coverage for employees or their dependents, and none planned to do so before 2018.
Conversely, 25 percent of small businesses with less than 200 workers said they either have already dropped or plan to drop their coverage by 2018 in favor of a fixed contribution, which employees can use to purchase insurance on their own.
None of the midsize firms with between 201 and 1,000 employees indicated they would discontinue coverage for active workers and only 3 percent said they would end coverage for dependents in 2018. Eleven percent of employers with between 1,001 and 5,000 workers planned to end their employee health benefits beginning in 2014, though none said they would end coverage for dependents.
Overall, 31 percent of employers indicated they plan to reduce the value of their benefit offerings in between 2014 and 2016 to avoid the 40 percent excise tax on expensive health care policies — set to take effect in 2018. Another 41 percent responding they will do so in 2017.
The MBGH's findings were consistent with other studies released this year. In July, 81 percent of 560 employers surveyed by Deloitte L.L.P. indicated they planned to maintain their employee health benefits programs through 2015. In another survey of 512 employers, released in March by Towers Watson & Co., only 11 percent of responding companies said they were considering drop their coverage in favor of a fixed subsidy for private purchasing.
Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. Comment below or email editors@workforce.com.
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