Employers brace for cost increases

With the remaining provisions of the Affordable Care Act (ACA) going into effect in less than a year, employers are trying to prepare for how the law will impact health plan enrollment and cost.

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Consulting firm Mercer surveyed nearly 900 employers to find out how employer thinking on healthcare reform has evolved since the law was signed three years ago. Mercer presented the survey results during a webcast on Wednesday.

The survey found that employers have increased their estimates of the cost impact of the ACA, according to webcast speakers Tracy Watts, healthcare reform leader at Mercer, and Beth Umland, director of research for health and benefits at Mercer.

In 2011, 25 percent of survey respondents believed that the law would have little or no impact on their healthcare costs once the law went into effect (less than a 1 percent increase). In 2013, 9 percent of respondents have this same belief. Today, 19 percent of respondents expect healthcare costs to rise significantly (by 5 percent or more). In 2011, 15 percent expected costs to rise significantly.

 [See also: Employer-sponsored healthcare coverage costs up ]

Watts said that while employers can calculate how many employees will be newly eligible for coverage, they can only guess how many will actually elect coverage. While all individuals are required to have health coverage in 2014, the tax penalty for not obtaining insurance coverage will be relatively low, so some employees may choose to pay the penalty.

She added that changes in contribution strategy will also make it harder for employers to predict enrollment levels. Some employers are attempting to protect themselves from big jumps in enrollment by raising employee contributions for coverage, particularly for dependents. Nearly a third of respondents said they will require a bigger paycheck deduction for dependent coverage next year, and 13 percent will raise the contribution percentage for employee-only coverage. These changes may affect enrollment decisions in families where both spouses have coverage available.

When the surveyed employers were asked if they were budgeting for an increase in enrollment in 2014, 17 percent said they are; 42 percent said they are not, and 41 percent still haven't decided, according to Watts and Umland.

The survey also found that about a fourth of employers are still unsure of how they will track and record the hours of employees who work variable hours, as is required by the new law in order to verify that all employees working 30-plus hours are offered coverage.

[See also: Employer health benefit cost increases lowest in 15 years]

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