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.

Hisham Uadadeh enrolls in a health insurance plan under the Affordable Care Act with the help of A. Michael Khoury at Leading Insurance Agency on February 13, 2014 in Miami, Florida. Numbers released by the government showed that about 3.3 million people signed up for health insurance plans under the Affordable Care Act through the end of January.
National Journal
Clara Ritger
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Clara Ritger
March 12, 2014, 1:35 p.m.

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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