Small And Large Employers Alike Are Feeling The Impact Of The ACA

A human resource consulting firm recently released the results of its annual survey on employer-sponsored health care plans. One piece of good news from the survey is that average health care costs per employee experienced a smaller increase this year (3.8 percent) as compared to the increase in 2014. This is the third year in a row in which increases have been below four percent.

Unfortunately, small employers, those with 10 to 499 employees, experienced higher average cost increases at 5.9 percent. Large employers with 500 or more employees fared better with an average increase of 2.9 percent.

However, 23 percent of large employers face paying the "Cadillac" tax in 2018 if the coverage they offer is considered high-cost insurance. The number of affected employers is expected to increase to 45 percent by the year 2022.

Employers are looking at a variety of ways they can reduce health care costs. Offering health plans that are consumer directed with a high deductible is their primary strategy. The survey found that 25 percent of covered employees use this type of plan along with an employee savings or reimbursement account.

Even with cost-saving measures, the employers surveyed expect their per-employee health benefit expenses to rise by 4.3 percent in 2016. "Survey: One in four large employers at risk for 'Cadillac' tax,"www.businessrecord.com (Nov. 20, 2015).

Commentary

The Affordable Care Act (ACA) was enacted in March 2010. The ACA requires employers with more than 50 full-time employees to offer health coverage that meets set standards for affordability and coverage. Failure to do so could result in fines. Employers with fewer than 50 employees are not required to provide health insurance to their employees, but are given options for doing so if they choose.

The "Cadillac" tax goes into effect in 2018 and imposes a 40 percent excise tax on employers who provide a health care plan with premiums that exceed $10,200 for an individual and $27,500 for a family. The tax is based on the premium amount over the stated threshold.

Because of the increases in costs projected for 2018, many employers will be reviewing what to do in the immediate future.

Whatever actions your organization takes, make certain you are compliant with federal and state equal employment and anti-retaliation laws. Terminating an employee for using benefits, or providing benefits unequally to different groups of employees, can lead to discrimination claims.