Employers believe 2016 will be most expensive year for ACA law

May 27, 2015

The International Foundation of Employee Benefit Plans conducted a survey in March this year on how single-employer plans are being affected by the Affordable Care Act. The foundation received responses from 598 human resources and benefits professionals who represent employers from nearly 20 industries that range in size from fewer than 50 employees to more than 10,000. Read more: http://www.bizjournals.com/milwaukee/news/2015/05/26/employers-say-2016-will-be-costliest-year-yet-for.html

The vast majority of Employers agreed that they believe the biggest costs for the Affordable Care Act are yet to come, (71% of Employers think this according to the survey.) Some think it will happen next year; others say in 2018 when the Cadillac Tax kicks in. In addition to taxes and annual increases in premiums, the country is waiting for the Supreme Court to rule this summer on the subsidies given to federally exchanges - whether or not this is allowed by law. While this generally does not affect Employers, taking away subsidies could be very costly for many people, making their insurance unaffordable. Either way, most Employers agree this law has not reduced their costs for premiums or benefits.

The survey goes on to say that a vast majority of Employers are now offering a High Deductible Health Plan option with an HSA (Health Savings Account). HSA's can be Employer funded or Employee Funded. While the article does not specifically mention HRA plans, more Employers are looking at HRA (Health Reimbursement Accounts) - type plans as a way of enhancing their benefit packages. (NOTE: an HRA must be paired with a group medical plan and cannot reimburse for individual medical policies, either the deductibles or premiums for individual plans). One type of HRA could be used to back-end fund a higher deductible plan; the Employer offers a much higher deductible (Say $2000 instead of $1000 per person), and the Employer reimburses the Employee for the deductible met above a certain limit ($1000 in this example). The numbers have to add up, but the premiums savings for increasing the deductible might outweigh the potential risk of reimbursing Employees for claims.

Another HRA concept that is becoming popular is to offer an HRA for dental and vision benefits, and this does not have to be paired with insurance. The reimbursement can be a flat, annual dollar limit, or the plan can mimic benefits of a traditional dental or vision insurance plan. Stay tuned...we will be blogging more on this topic later.