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How Company Health Care Plans Are Evolving in the Age of Obamacare How Company Health Care Plans Are Evolving in the Age of Obamacare

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How Company Health Care Plans Are Evolving in the Age of Obamacare

A new survey finds that employers are changing pricier health plans to avoid the law's "Cadillac" tax.


(Photo by Joe Raedle/Getty Images)

Employers are already making changes to health benefits in anticipation of new Obamacare requirements, including shifting employees to plans with higher deductibles and higher cost sharing, a new survey found.

At the same time, relatively few employers are cutting back on work hours to keep employees from qualifying for benefits, results showed.


The increased administrative burden the Affordable Care Act imposes, however, had 78 percent of employers reporting "significant" or "very significant" concerns, according to the new report from New York-based consulting firm Mercer, which surveyed roughly 700 employers at the end of January.

Sixty-two percent of employers indicated a similar level of anxiety about paying the excise tax on high-cost health plans.

"The excise tax continues to be a huge concern to employers," said Tracy Watts, head of the health care reform team at Mercer. "The last time that we looked at the excise tax, almost half of employers had plans that would hit the excise tax in 2018. Last summer, one-third of employers said they were already making changes in 2014 in anticipation of the excise tax in 2018."


Some of the changes those companies are making include switching employees to consumer-directed health plans and getting rid of those high-cost plans altogether, Watts said. Consumer-directed health plans tend to be less expensive up-front and put more onus on the employee to manage health costs by creating spending accounts and raising deductibles.

Of surprisingly less importance to employers is the 30-hour work requirement. The Affordable Care Act requires employers to offer health benefits to all employees who work 30 or more hours per week.

A number of employers have made a fuss about the 30-hour work requirement, arguing that it's not technically full-time and that it will force them to reduce hours in order to keep people from qualifying for health coverage. Some, including Target, Trader Joe's, and United Parcel Service, have already garnered heavy media coverage after making changes because of the health law's expansion of coverage.

But, according to Mercer's findings, 76 percent of employers don't plan to make any changes to their workforce due to the 30-hour work requirement. Only 10 percent have reduced or will reduce the number of employees working 30 hours or more, and 14 percent indicated that they have or will make other changes to deal with the bump in the number of employees who qualify for health benefits.


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