ACA Survey

2014
Employer-Sponsored
Health Care:
ACAs Impact
S U R V E Y R E S U LT S
Tis survey report was prepared by the International Foundation of Employee Beneft Plans. Although great care
was taken in researching the information in this report and the underlying sources are considered to be reliable, the
accuracy and completeness of the report cannot be guaranteed.
Tis publication is sold with the understanding that the publisher is not engaged in rendering any business, fnancial,
investment or other professional advice or service. Tis report is not a substitute for the services of a professional,
nor should it be used as a basis for any decision or action that may afect your business. Consult a qualifed profes-
sional. Te International Foundation shall not be responsible for any loss sustained by any person who relies on this
publication.
Writen and compiled by
Neil Mrkvicka
Justin Held, CEBS
Julie Stich, CEBS
Edited by
Kathy Bergstrom
Copies of this report may be obtained from
Publications Department
International Foundation of Employee Beneft Plans
18700 West Bluemound Road
Brookfeld, WI 53045
Call (888) 334-3327, option 4, for price information or see www.ifebp.org/bookstore.
Published in 2014 by the International Foundation of Employee Beneft Plans, Inc.
2014 International Foundation of Employee Beneft Plans, Inc.
All rights reserved.
ISBN 978-0-89154-744-0
Printed in the United States of America
RS140681
614
2014 Employer-Sponsored Health Care: ACAs Impact: Survey Results |
ii
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
About the International Foundation of Employee Beneft Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
About the International Society of Certifed Employee Beneft Specialists . . . . . . . . . . . . . . . . . . . . v
About Research at the International Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III. General Focus and Reactions to ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
IV. Strategies, Actions and Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
V. ACA Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
VI. Reactions to Health Insurance Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
VII. Retiree and Part-Time Employee Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
VIII. Grandfathered Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
IX. Cost Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
X. Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Exhibits
Exhibit 1: Current Focus Regarding ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exhibit 2: Compliant and Have a Multiyear Approach to ACA by Employer Size . . . . . . . . . . . . . . . . 7
Exhibit 3: Effect of ACA on Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exhibit 4: Workforce Adjustments Due to ACA by Employer Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exhibit 5: Cost-Containment Measures Due to ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exhibit 6: Cost-Containment Measures Taken Due to ACA by Year . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibit 7: Changes in Plan Design/Utilization Due to ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibit 8: Audits/Analysis Conducted Due to ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exhibit 9: ACAs Impact on HDHPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exhibit 10: Currently Meeting ACA Test Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exhibit 11: Change in Funding Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table of Contents
| International Foundation of Employee Beneft Plans ii
Exhibit 12: Offering Increased Wellness Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exhibit 13: Taking Action to Avoid 2018 Excise Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exhibit 14: Taking Action to Avoid 2018 Excise Tax by Employer Size (Yes Responses) . . . . . . . . . . 16
Exhibit 15: Taking Action to Avoid 2018 Excise Tax by Year (Yes Responses) . . . . . . . . . . . . . . . . . . 16
Exhibit 16: ACA Communication Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit 17: Obstacles to Communicating With Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit 18: Change in Number of Employee Questions Due to ACA . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Exhibit 19: Top Ten Most Common ACA Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Exhibit 20: Employee Overall Understanding of ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exhibit 21: Change in Employee Engagement/Interest in Their Health Care Due to ACA . . . . . . . . 20
Exhibit 22: Likelihood of Continuing Coverage for All Full-Time Employees by Year . . . . . . . . . . . . . 22
Exhibit 23: Likelihood of Continuing Coverage for All Full-Time Employees by Employer Size . . . . 22
Exhibit 24: Likelihood of Continuing Coverage Five Years From Now . . . . . . . . . . . . . . . . . . . . . . . . . 22
Exhibit 25: Likelihood of Taking Action With Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Exhibit 26: Likelihood of Offering Subsidy if Coverage Is Discontinued . . . . . . . . . . . . . . . . . . . . . . . 23
Exhibit 27: Likely Cause for Discontinuing Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Exhibit 28: Likely Cause for Discontinuing Coverage by Employer Size . . . . . . . . . . . . . . . . . . . . . . . 24
Exhibit 29: Main Reasons to Continue Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Exhibit 30: Provide Coverage Through a Private Exchange for Full-Time Employees . . . . . . . . . . . 25
Exhibit 31: Offer Coverage to Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit 32: Likelihood to Continue Current Retiree Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Exhibit 33: Provide Coverage Through a Private Exchange for Retiree Groups . . . . . . . . . . . . . . . . 28
Exhibit 34: Offer Coverage to Part-Time Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Exhibit 35: Likelihood to Continue Coverage for Part-Timers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Exhibit 36: Provide Coverage Through a Private Exchange for Part-Time Employees . . . . . . . . . . . 29
Exhibit 37: Portion of Plans With Grandfathered Status by Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Exhibit 38: Currently Grandfathered by Employer Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Exhibit 39: Outlook for Maintaining Grandfathered Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit 40: Top Benefts of Maintaining Grandfathered Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit 41: Conducted Analysis of ACA Costs by Year (Yes Responses) . . . . . . . . . . . . . . . . . . . . . . . 34
Exhibit 42: Conducted Analysis of ACA Costs by Employer Size (Yes Responses) . . . . . . . . . . . . . . 34
Exhibit 43: Cost Impact Due to ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
iii
Exhibit 44: Cost Impact Due to ACA in 2014 by Employer Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Exhibit 45: Cost Impact Due to ACA by Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Exhibit 46: Provision With Most Signifcant Cost Increases for 2014 . . . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit 47: Forthcoming Provision With Most Signifcant Cost Increases . . . . . . . . . . . . . . . . . . . . . 37
Exhibit 48: Year of Largest Expected Cost Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Exhibit 49: Plan With Majority Enrolled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Exhibit 50: Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Exhibit 51: Number of Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Exhibit 52: Primary Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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v
Acknowledgments
We are very grateful to the industry experts who initially reviewed the survey questionnaire and the individuals who
contributed their time to complete the survey.
About the International Foundation of Employee Beneft Plans
Te International Foundation of Employee Beneft Plans is a nonproft organization, dedicated to being a leading
objective and independent global source of employee benefts and compensation education and information. Total
membership includes 33,000 individuals representing multiemployer trust funds, corporations, public employer
groups and professional advisory frms throughout the United States and Canada. Each year, the International
Foundation ofers over 100 educational programs, including conferences and e-learning courses. Membership
provides access to personalized research services and daily news delivery. Te International Foundation sponsors
the Certifed Employee Beneft Specialist (CEBS) program in conjunction with the Wharton School of the
University of Pennsylvania and Dalhousie University in Canada.
About the International Society of Certifed Employee Beneft Specialists
Te International Society of Certifed Employee Beneft Specialists (ISCEBS) is a membership organization for
those who have earned or are pursuing the Certifed Employee Beneft Specialist (CEBS), group benefts associate
(GBA), retirement plans associate (RPA) and compensation management specialist (CMS) designations. Members
have access to educational programs, information resources, networking at the local and national levels, publications
and other services. Nearly 4,000 CEBS, GBA, RPA and CMS designees are members of ISCEBS; they work for
corporations, consulting frms, multiemployer funds, insurance companies and in other industry professions.
About Research at the International Foundation
Te International Foundation conducts, writes and disseminates research studies, surveys and special reports on
a range of benefts, compensation and fnancial literacy issues. Te purpose of International Foundation research
eforts is to enhance the capacity of its members and constituents to understand, design and deliver employee
benefts that improve the fnancial security of plan participants and employees. Research programs include
benchmarking studies, atitudinal surveys, special reports, hot topic surveys and collaborative projects.
11
On April 17, 2014, the International Foundation of Employee Beneft Plans deployed its ffh survey in a series on
how single employer plans are being afected by the Afordable Care Act (ACA).
1
Te surveys are in-depth studies
of how single employers with health care plans are responding to the challenges and opportunities presented by
ACA. Te frst survey, conducted in May 2010, emphasized employers immediate considerations and approaches
for complying with the new law. Te second, third and fourth surveys focused on the actions employers took in
2011, 2012 and 2013.
2014 Employer-Sponsored Health Care: ACAs Impact focuses on the most important health care reform issues facing
employers this year. Topics addressed include employer concerns about plan design and funding, methods for com-
municating with employees, grandfathered plan status, reactions to health insurance exchanges, cost-management
initiatives and the potential impact on health care beneft costs.
Tose asked to participate in the 2014 survey were single employer plans (including corporations) in the databases
of the International Foundation and the International Society of Certifed Employee Beneft Specialists (ISCEBS).
2

Survey responses were received from 691 human resources and benefts professionals and industry experts. Te
surveyed organizations represent a wide base of U.S. employers from nearly 20 diferent industries. Insurance and
related felds (16.4%) and manufacturing and distribution (13.7%) are most represented. Surveyed employers range
in size from fewer than 50 employees to more than 10,000. Te demographic characteristics of the respondents in
the 2010 to 2013 surveys were very similar to those in the 2014 survey. In several places throughout this report,
comparison data is displayed by employer size and by years. We urge readers to exercise caution when interpreting
comparison data from previous surveys because of the nature of the sample designs and potential nonresponse er-
ror.
Tis report has nine sections beyond this introduction. Section II provides key fndings. Detailed fndings are pre-
sented in Sections III through VIII. Section III discusses employers general status in response to ACA. Strategies,
actions and initiatives employers are adopting due to ACA are examined in Section IV. Section V discusses ways
employers are communicating with their participants about reform. Section VI focuses on employers reactions to
the opening of the health insurance exchanges. Retiree and part-time employee coverage options are examined in
Section VII. Employer perspectives on grandfathered plans are examined in Section VIII. Te cost impact of ACA is
examined in Section IX. Section X discusses the demographic profle of respondents.
Tis survey is the ffh in a series of reports on the impact of ACA on single employer beneft plans. Readers are encouraged
to watch for additional reports that help plan sponsors benchmark their beneft programs and practices against other plans.
1. Electronic survey deployment began April 17, 2014 and was concluded May 6, 2014.
2. Single employer plans are maintained by one employer or by related parties such as a parent company and its subsidiaries.
I. Introduction
33
II. Key Findings
Tis section presents major survey fndings concerning ACAs impact on single employer plans. Completed respons-
es were received from 691 individuals representing single employer plans (including corporations). Atention is
given to employers status in response to ACA, their communications with plan participants regarding reform, cost
implications, cost management initiatives, reactions to health insurance exchanges and grandfathered plan status.
Te survey includes questions posed in the context of What are you doing with your plan as a result of ACA? Te
reader is cautioned that some of the changes employers are making may not be directly infuenced by health care
reform, although they may be a by-product (i.e., if ACA is causing other costs to increase, employers may make
changes to benefts not otherwise afected by health care reform to ofset those increases).
General Focus and Reactions to ACA
More than one-third of organizations describe their current status as compliant and developing some tactics
to deal with the implications of reform. One in fve describes its status as compliant with a multiyear ap-
proach to deal with implications of reforms. On the other end of the spectrum, about one in six organizations
is just focused on atempting to keep compliant with each new provision going into efect.
Smaller organizations, typically with fewer resources, are less likely to have developed multiyear approaches
to deal with ACA.
More than half of respondents believe ACA has had an overall negative efect on their organization thus far,
and two-thirds of respondents believe ACA will have an overall negative efect on their organization in the
future.
Strategies, Actions and Initiatives
Te vast majority of larger employers appear uninterested in making broad workforce adjustments in re-
sponse to ACA. However, among employers with 50 or fewer employees, nearly one in six has reduced its
workforce due to ACA costs, more than one in ten has adjusted hours so fewer employees qualify as full-time,
more than one in ten froze/reduced pay raises/compensation, and one in ten has reduced hiring in order to
stay under the 50-employee ACA threshold for small employers.
Nearly one-third of organizations have increased out-of-pocket limits, increased participants share of pre-
mium costs and/or increased in-network deductibles in response to ACA. More than one in fve organiza-
tions have increased copayments or coinsurance for primary care and/or increased employee proportions
of dependent coverage costs. Compared with last year, organizations are implementing cost-containment
measures at a much higher rate.
Nearly one in fve organizations has adopted or expanded wellness initiatives due to ACA, and another 22%
plan on doing so in the next 12 months. More than one in ten organizations has already begun ofering the in-
creased wellness incentives allowed by ACA this year, and an additional two in fve are considering doing so.
| International Foundation of Employee Beneft Plans 4
Less than 5% of organizations have added or expanded their use of a bare bones mini-medical plan or
dropped spousal coverage because of ACA.
More than one in four organizations are increasing their emphasis on a high-deductible health plan (HDHP)
with a health savings account (HSA), and 16% are assessing the feasibility of adding one. Larger organiza-
tions are more likely to be increasing their emphasis on HDHPs compared with smaller organizations.
Nearly all surveyed organizations (96%) currently meet the minimum value requirement, and 91% currently
meet the afordability requirement. Nine in ten organizations currently meet both test requirements.
One-quarter of organizations have already started to redesign their primary health plan to avoid triggering the
2018 tax, and more than one-third are considering action. Te percentage of organizations redesigning their
health plans to avoid triggering the excise tax has steadily increased since 2011, and larger organizations are
more likely to be taking this action.
Te portion of organizations with a primary plan that is grandfathered has steadily declined over the last four
yearsmoving from 45% in 2011 to 18% in 2014and more than one in fve employers with a grandfa-
thered plan anticipate their plan will lose this status in 2015 or sooner.
ACA Communication
Annual enrollment materials, e-mails, company websites, special meetings and special writen communica-
tion pieces are the most popular channels for communicating with employees about ACA.
Te biggest obstacles to communicating with participants about ACA are confusion and a lack of interest
among participants.
More than half of organizations have noticed an increase in the number of questions about ACA from active
employees to human resources and benefts staf in the last 12 months. Respondents say the most common
questions are related to the health insurance exchanges (e.g., How do the exchanges work? Am I eligible? Are
they free? Could I qualify for a subsidy? How does exchange coverage compare to my current coverage?).
Half of organizations believe their employees understanding of ACA is average, and about one-third believe
understanding is poor or very poor. On the other hand, more than two in fve organizations believe ACA has
increased their employees engagement/interest in their health care.
Compared with larger organizations, smaller organizations are noticing more questions from participants,
greater participant understanding of ACA and increased participant engagement/interest in their health care
due to ACA.
Reactions to Health Insurance Exchanges
Nearly three-quarters of respondents report they defnitely will continue to provide health care coverage for
all full-time employees in 2015indicating a steady increase in confdence in employer-sponsored coverage
since 2012 when this fgure was below one-half. An additional one in fve reports being very likely to continue
to provide health care coverage for all full-time employees in 2015Less than 1% of respondents say they
defnitely will discontinue coverage to all full-time employees in 2015.
Respondents overwhelmingly chose three reasons for maintaining coverage: to retain current employees, to
atract future talent and to maintain/increase employee satisfaction and loyalty.
Tere is some uncertainty regarding employer-sponsored coverage fve years from now; however, most orga-
nizations say they likely will continue coverage.
5
Most organizations say they likely or defnitely will provide a subsidy if they discontinue coverage in the
future.
Te most common reasons given for potentially discontinuing coverage are the cost becoming too high
and if other organizations in their industry discontinue coverage. Larger organizations are more likely to be
concerned with the actions of others in their industry while smaller organizations are more likely to be solely
focused on costs.
Seven in ten employers currently ofering retiree coverage say they defnitely will or are very likely to continue
providing retiree coverage through 2015, and three-quarters of organizations providing coverage to part-time
employees say they defnitely will or are very likely to continue providing coverage to part-time employees
through 2015.
Regarding private exchanges, 12% currently use this option for retirees aged 65 and over, 9% have this in
place for future retirees, and 8% use private exchanges for early retirees (55-64 years old). An additional one-
quarter are considering private exchanges for early retirees, 23% are considering the option for future retirees,
and 19% are considering private exchanges for retirees aged 65 and over.
Less than 5% of responding organizations currently use private exchanges for their full-time or part-time em-
ployees, but 17% are considering this option for full-time employees, and 12% are considering it for part-time
employees.
Cost Impact
Te portion of organizations that have conducted an ACA cost analysis has grown steadily from less than
one-half in 2012 to more than two-thirds in 2014. Larger employers are more likely to have conducted an
analysis.
Among all organizations, nearly nine in ten expect the law will increase their organizations health care costs
this year. One in four estimates a cost increase of 1% to 2%, and a similar proportion predicts an increase of
3% to 4%. One in seven organizations estimates a cost increase greater than 10%. Te median cost increase is
4% among organizations that know their exact 2014 cost change due to ACA.
ACA-related costs are hiting smaller employers much harder than larger ones.
Estimates of ACA-associated cost increases rose from 2012 to 2013 but remained fairly consistent from 2013
to 2014.
Transitional reinsurance fee costs, general ACA administrative costs and increased Patient-Centered Out-
comes Research Institute (PCORI) fees are the top three ACA cost drivers for 2014.
Te excise tax on high-cost group health plans (a.k.a. Cadillac tax), general ACA administrative costs and
transitional reinsurance fee costs are the top three ACA cost drivers beyond 2014.
More than two in fve employers expect 2015 to be the year that will produce the greatest cost increases due
to ACA. About one in fve expects 2018the year of the excise tax on high-cost group health plansto be
the year producing the greatest cost increases. One in six expects costs to increase the most this year (2014).
77
III. General Focus and Reactions to ACA
Tis section of the survey report examines employers general response to and strategies concerning ACA. Organi-
zations are at various stages assessing the impact of and developing approaches to health care reform. As shown in
Exhibit 1, more than one-third (36.8%) describe their current status as compliant and developing some tactics to
deal with the implications of reform. One in fve (20.4%) describes its status as compliant and having a multiyear
approach to deal with implications of reforms. On the other end of the spectrum, 17.1% of organizations are just fo-
cused on atempting to keep compliant with each new provision going into efect. Exhibit 2 shows smaller organiza-
tions, typically with fewer resources, are less likely to have developed multiyear approaches to deal with ACA.
More than half of respondents (54.1%) believe ACA has had an overall negative efect on their organization thus far
(41.2% somewhat negative; 12.9% very negative) (Exhibit 3). About one-third (35.3%) describe ACAs efect on
their organization thus far as neutral, and 10.6% say the efect has been positive. Looking toward the future, two-
thirds of respondents (66%) predict ACA will have an overall negative efect on their organization (47.3% some-
what negative; 18.7% very negative). One in fve (19.8%) forecasts a neutral efect, while 14.1% believe the efect
will be positive.
EXHIBIT 1
Current Focus Regarding ACA*
(n=691)
Attempting to keep compliant as each new provision goes into effect 17.1%
Compliant but taking a wait-and-see approach with strategy 14.3%
Compliant but just beginning to get a handle on how ACA will affect our plan(s) in the future 11.4%
Compliant and developing some tactics to deal with implications of reform 36.8%
Compliant and have a multiyear approach to deal with implications of reform 20.4%
*Respondents were asked to select the one statement that best describes their organizations current focus.
EXHIBIT 2
Compliant and Have a Multiyear Approach to ACA by Employer Size
(n=691)
0-50 12.9%
51-499 14.5%
500-4,999 20.1%
5,000-9,999 29.7%
10,000+ 35.4%
EXHIBIT 3
Effect of ACA on Organization
Thus Far Future
(n=691) (n=691)
Very positive 2.6% 2.7%
Somewhat positive 8.0% 11.4%
Neutral 35.3% 19.8%
Somewhat negative 41.2% 47.3%
Very negative 12.9% 18.7%
99
IV. Strategies, Actions and Initiatives
Efective January 1, 2015, ACA requires most employers to ofer afordable health care coverage to full-time em-
ployees or pay a penalty. Full-time employment is defned as 30 or more hours of work per week. Te vast majority
of surveyed employers (90% or 624 total respondents) ofer medical benefts to employees who work more than 30
hours on average per week. Te remaining survey results focus primarily on this group providing medical benefts.
Tis section examines changes in organizational strategy, plan design and initiatives to curb anticipated rising costs.
Respondents were asked about workforce adjustments they planned to make in response to ACA. Te vast major-
ity of larger employers appear uninterested in such adjustments; however, employers with 50 or fewer employees
are taking some actions (Exhibit 4). Among employers with 50 or fewer employees, 15.5% have reduced their
workforce because of costs directly associated with ACA, and 9.9% have reduced hiring in order to stay under the
50-employee ACA threshold for small employers. More than one in ten employers with 50 or fewer employees have
adjusted hours so fewer employees qualify for the full-time employee medical insurance requirement (11.3%) and/
or froze/reduced pay raises/compensation (11.3%).
Respondents were asked whether their organizations had increased or plan to increase participant cost sharing to
contain costs. Nearly one-third (32.4%) have increased out-of-pocket limits (Exhibit 5). Slightly lower proportions
report they have increased participants share of premium costs (30.3%) and in-network deductibles (29.6%). More
than one in fve organizations have increased copayments or coinsurance for primary care (23.6%) and/or increased
employee proportions of dependent coverage costs (20.4%). In the next 12 months, an additional 16.7% plan to
increase the employee portion of dependent coverage cost, and 16.3% plan to increase out-of-pocket limits. Among
the other changes in cost sharing planned are increasing in-network deductibles (15.1%), increasing participants
share of premium costs (14.7%) and increasing participants share of prescription drug costs (14.1%). Exhibit 6
shows that, compared with last year, organizations are implementing cost-containment measures at a considerably
higher rate.
Nearly one in fve organizations (18.1%) has adopted or expanded wellness initiatives because of ACA, and another
22.3% plan on doing so in the next 12 months (Exhibit 7). When asked about other plan design/utilization changes
spurred by ACA, about one in six (16.3%) reports adopting or expanding the use of fnancial incentives to encour-
age healthy behaviors, and another 19.6% plan on doing so in the next 12 months. Lower proportions report they
have adopted a disease management program (8.5%). Less than 5% of organizations have added or expanded their
use of a bare bones mini-medical plan (3.8%) or dropped spousal coverage (3.8%).
Nearly one-quarter of surveyed organizations (22.6%) have conducted dependent eligibility audits or plan to do
so in the next 12 months as a result of ACA (Exhibit 8). Another 23.2% have conducted or plan to conduct claims
utilization, while 14.5% have conducted or plan to conduct health care claims audits.
One in four organizations (26.9%) is increasing emphasis on an HDHP with a health savings account (HSA), while
16% are assessing the feasibility of adding this option (Exhibit 9). Lower proportions report they are increasing
emphasis on or assessing the feasibility of adding an HDHP with a health reimbursement arrangement (HR)
(16.8%) or an HDHP with no account (10.5%). Larger organizations are more likely to be increasing their empha-
sis on HDHPs compared with smaller organizations.
Te Treasury Department and Internal Revenue Service (IRS) have published a proposed rule implementing ACAs
employer shared responsibility penalty. Te rule consists of both afordability and value requirements. Generally, a
plan with a 60% actuarial value meets the minimum value requirement. Coverage meets the afordability require-
ment if the employee portion of self-only premiums for an employers lowest cost coverage (meeting the minimum
value standard) does not exceed 9.5% of the employees household income. Respondents were asked whether their
plans currently meet these requirements (Exhibit 10). Nearly all surveyed organizations (96.2%) currently meet
the minimum value requirement, and 91.2% meet the afordability requirement. Nine in ten organizations (90.1%)
meet both test requirements.
As shown in Exhibit 11, ACA has not prompted plan funding changes for a large majority of responding employers
(89.4%). Some employers that use self-funding may choose to limit potential medical claims exposure by purchas-
ing stop-loss insurance in case claims exceed a predetermined amount for an individual participant or the entire
group.
3
A small portion of organizations (7.9%) have added stop-loss insurance.
In 2014, employers will be permited to ofer employees incentives of up to 30% of the cost of health plan coverage
for participating in a wellness program and meeting certain health-related standards.
4
An incentive of as much as
50% will be permited to prevent or reduce tobacco use. More than one in ten organizations (12.2%) have already
begun ofering the increased incentives, and an additional 40.1% are considering doing so (Exhibit 12).
Starting in 2018, ACA imposes a nondeductible excise tax on employers with high-cost health plans.
5
High-cost
plans are defned as any health-related coverage in which combined employer/employee premiums exceed $10,200
for single coverage or $27,500 for family coverage.
6
While the 2018 deadline is several years away, Exhibit 13 shows
that 24.5% of responding organizations have already started to redesign their primary health plan to avoid triggering
the 2018 tax. An additional 37.2% are considering action. Exhibits 14 and 15 show there has been a steady increase
in organizations redesigning their health plans since 2011 to avoid triggering the excise tax, and larger organizations
are more likely to be taking action. In an open-ended followup question, the most common redesign step identifed
by organizations that have started to redesign their plans was reducing benefts and/or shifing costs to employees
(i.e., increasing employee contributions, deductibles, copays, coinsurance and out-of-pocket maximums). Other
common redesign themes among employers were: moving to a consumer-driven health plan (CDHP), dropping
higher cost plan options and adding more afordable plan options. A few respondents mentioned adopting well-
ness and preventive initiatives, and a couple more are considering a defned contribution approach with a private
exchange.
3. Insurance coverage that caps the total claims experience of the group is known as aggregate stop-loss. An organization might also
limit its liability using specifc stop-loss, which sets a limit on the amount that a plan sponsor will pay for an individual case.
4. Prior to 2014, the allowed incentive level was 20%.
5. Te nondeductible excise tax will equal 40% of the premium cost in excess of the annual limit ($10,200 for single coverage and
$27,500 for family coverage).
6. Both fgures will be indexed for infation.
11
EXHIBIT 4
Workforce Adjustments Due to ACA by Employer Size*
(n=624) 0-50 More than 50 Overall
Reduction in hiring to get/stay under the 50-employee ACA threshold for small employers
Have done 9.9% 1.6% 2.6%
Plan on doing in the next 12 months 2.8% 0.9% 1.1%
Adjusting hours so fewer employees qualify for full-time employee medical insurance requirement
Have done 11.3% 8.3% 8.7%
Adding workers to help keep compliant with ACA
Have done 1.4% 4.0% 3.7%
Reduction in workers due to costs directly associated with ACA
Have done 15.5% 3.3% 4.6%
Froze or reduced pay raises/compensation
Have done 11.3% 3.8% 4.6%
* Respondents were asked about the actions they have taken specifcally due to ACA. Other response options included: made no
changes, were unsure, or the question was not applicable.
EXHIBIT 5
Cost-Containment Measures Due to ACA*
(n=624)
Increase out-of-pocket limits
Have used 32.4%
Plan on using in the next 12 months 16.3%
Increase participants share of premium costs
Have used 30.3%
Increase in-network deductibles
Have used 29.6%
Increase copayments or coinsurance for primary care
Have used 23.6%
Increase employee proportion of dependent coverage cost
Have used 20.4%
Increase participants share of prescription drug costs
Have used 18.9%
Modify/add tiers to cost-sharing structure
Have used 10.9%
Increase voluntary (employee-pay-all) beneft offerings
Have used 8.0%
Structure premiums based on income
Have used 3.4%
13
EXHIBIT 6
Cost-Containment Measures Taken Due to ACA by Year*
2013 2014
(n=879) (n=624)
Increase out-of-pocket limits 13.8% 32.4%
Increase participants share of premium costs 18.0% 30.3%
Increase in-network deductibles 14.9% 29.6%
Increase copayments or coinsurance for primary care 12.7% 23.6%
Increase employee proportion of dependent coverage cost 10.4% 20.4%
Increase participants share of prescription drug costs 11.7% 18.9%
Modify/add tiers to cost sharing structure 6.9% 10.9%
Increase voluntary (employee-pay-all) beneft offerings 4.3% 8.0%
Structure premiums based on income 2.6% 3.4%
*Respondents were asked about the actions they have taken specifcally due to ACA.
EXHIBIT 7
Changes in Plan Design/Utilization Due to ACA*
(n=624)
Adopt/expand wellness initiatives
Have done 18.1%
Plan on doing in next 12 months 22.3%
Adopt/expand the use of fnancial incentives to encourage healthy behaviors
Have done 16.3%
Adopt/expand disease management
Have done 8.5%
Add/expand use of bare bones mini-medical plan(s)
Have done 3.8%
Drop spousal coverage
Have done 3.8%
EXHIBIT 8
Audits/Analysis Conducted Due to ACA*
(n=624)
Health care claims utilization analysis
Conducted 11.2%
Plan on conducting in the next 12 months 12.0%
Dependent eligibility audits
Conducted 11.5%
Health care claims audits
Conducted 6.6%
EXHIBIT 9
ACAs Impact on HDHPs*
(n=624)
HDHP with HSA
Increasing emphasis 26.9%
Assessing feasibility of adding 16.0%
Assessing feasibility of dropping 0.5%
Decreasing emphasis 0.5%
HDHP with HRA
HDHP with no account
* Respondents were asked about the actions they have taken specifcally due to ACA. Remaining respondents answered No
change or Not applicable.
15
EXHIBIT 10
Currently Meeting ACA Test Requirements
(n=624)
Minimum value requirement (health plan pays at least 60% of allowed costs)
Yes 96.2%
No 0.6%
Not sure 3.2%
9.5% affordability test requirement
Yes 91.2%
No 2.9%
Not sure 5.9%
Percentage meeting both test requirements 90.1%
EXHIBIT 11
Change in Funding Approach*
(n=624)
No changes to plan funding approach 89.4%
Have become fully insured 1.3%
Have become completely self-funded with stop-loss coverage 4.5%
Have become completely self-funded without stop-loss coverage 0.8%
Already self-funded, but now purchased stop-loss coverage 1.3%
Already self-funded, but now purchased additional stop-loss coverage 2.1%
Already self-funded, but dropped stop-loss coverage 0.6%
*Respondents were asked what actions they have taken specifcally due to ACA.
EXHIBIT 12
Offering Increased Wellness Incentives*
(n=624)
Yes 12.2%
No, but considering 40.1%
No 45.7%
Not sure 2.1%
*Based on increased incentives allowed through a provision effective this year.
EXHIBIT 13
Taking Action to Avoid 2018 Excise Tax
(n=624)
Yes 24.5%
No, no plan to do so 12.8%
Not sure 5.1%
Not applicable; have no high-cost plans 20.4%
EXHIBIT 14
Taking Action to Avoid 2018 Excise Tax by Employer Size
(Yes Responses)
(n=624)
0-50 11.3%
51-499 13.7%
500-4,999 29.3%
5,000-9,999 29.0%
10,000+ 38.7%
EXHIBIT 15
Taking Action to Avoid 2018 Excise Tax by Year
(Yes Responses)
2011 (n=1,134) 10.5%
2012 (n=927) 13.9%
2013 (n=879) 16.8%
2014 (n=624) 24.5%
17 17
V. ACA Communication
Section V examines employer communication and employee engagement with ACA. Most employers (71%) use
annual enrollment materials to communicate with employees about ACA (Exhibit 16). E-mails sent to employees
(61.7%), a company website (39.9%), special meetings (32.1%) and special writen communication pieces (31.6%)
are also popular channels of communication. Larger organizations are more likely to communicate via annual enroll-
ment and company websites, while smaller organizations are more likely to communicate throughout the year and
through special meetings. Participant confusion (56.4%) and lack of interest (39.6%) are the biggest obstacles to
communicating about ACA (Exhibit 17). Some of the common themes among other responses submited were
employees forming ideas afer listening to media pundits (positive and negative), governments inability to stick to
its own deadlines and general language barriers explaining ACA to non-English-speaking populations.
Exhibit 18 shows how ACA interest among employees has increased in the last 12 months. More than half of orga-
nizations (52.4%) have noticed an increase in the number of ACA-related questions human resources and benefts
staf have received from active employees. Very few organizations (3.5%) have seen a decrease in questions about
ACA. Respondents say the most common questions from employees are related to the health insurance exchanges
(e.g., How do the exchanges work? Am I eligible? Are they free? Could I qualify for a subsidy? How does exchange
coverage compare to my current coverage?) (Exhibit 19). Other frequently asked questions include: How does the
law afect me/Do I need to do anything? What will this cost me/Why are my costs going up? Is the company plan-
ning to drop coverage? How will our benefts change/Is this benefts change because of ACA?
Exhibit 20 shows that one-half of organizations (49.8%) believe their employees understanding of ACA is just
average, while about one-third (32.2%) rate their employees understanding as poor or very poor (23.2% and 9%,
respectively). On the other hand, more than two in fve organizations (42.6%) believe ACA has increased their
employees engagement/interest in their health care (Exhibit 21). Smaller employers are more likely to report more
participant questions, greater employee understanding of ACA and increased participant employee engagement/
interest in their health care compared with larger organizations.
EXHIBIT 16
ACA Communication Initiatives*
(n=624)
Communicate during annual enrollment period 71.0%
E-mail sent to employees 61.7%
Organization website 39.9%
Special meeting(s) 32.1%
Special written communication piece(s) either in payroll inserts,
sent to employees/retirees homes or distributed by some other means 31.6%
Communicate implications of reform throughout the year 27.9%
Regular organization newsletter 14.1%
Social media (e.g., Facebook, Yammer, Google+, LinkedIn, Twitter, YouTube, blogs) 3.7%
Other 3.2%
No communication about ACA changes 3.8%
*Respondents were asked to select all that apply.
EXHIBIT 17
Obstacles to Communicating With Participants*
(n=624)
Confusion among participants 56.4%
Lack of interest among participants 39.6%
Participants are having diffculty keeping up with each new piece
of the law and regulations 34.1%
Organization is having diffculty keeping up with each new piece
of the law and regulations 23.2%
Have not experienced obstacles communicating with participants 27.9%
Other (please specify) 5.3%
19
EXHIBIT 18
Change in Number of Employee Questions Due to ACA*
(n=624)
Increased signifcantly 15.2%
Increased somewhat 37.2%
Stayed the same 44.1%
Decreased somewhat 1.6%
Decreased signifcantly 1.9%
* Change in the number of questions by participants to the human resources/benefts staff in the past 12 months.
EXHIBIT 19
Top Ten Most Common Employee ACA Questions*
(n=624)
1. How do the exchanges work? Am I eligible? Are they free? Could I qualify for a subsidy?
How does exchange coverage compare to my current coverage?
2. How does the law affect me? Do I need to do anything?
3. What will this cost me? Why are my costs going up?
4. Is the company planning to drop coverage?
5. How will our benefts change? Is this benefts change because of ACA?
6. Can my child stay on the plan longer?
7. Do I have to get coverage if I dont have it now? I need to sign up for benefts now,
because I will be penalized by ACAWhen will there be an open enrollment opportunity?
8. Will I have an average 30 hours per week and qualify for benefts in 2015?
9. Are we dropping spousal/dependent coverage?
10. How does the law impact the future of the company?
* Respondents were asked to submit the most common question their HR/benefts staff has been receiving from employees
regarding ACA.
EXHIBIT 20
Employee Overall Understanding of ACA
(n=624)
Very good 3.4%
Good 9.3%
Average 49.8%
Poor 23.2%
Very poor 9.0%
Not sure 5.3%
EXHIBIT 21
Change in Employee Engagement/Interest in Their Health Care Due to ACA
(n=624)
Increased engagement/interest signifcantly 6.9%
Increased engagement/interest slightly 35.7%
No change 51.0%
Decreased engagement/interest slightly 1.0%
Decreased engagement/interest signifcantly 0.5%
Not sure 5.0%
21 21
VI. Reactions to Health Insurance Exchanges
Employer reactions to the health insurance exchanges and the play or pay provisions of ACA are explored in this
section. Beginning in 2015, larger employers (100 or more full-time employees) face penalties (generally $2,000 per
employee) if they do not ofer minimum essential coverage to their employees and any of their employees receive
a subsidy to obtain coverage through a health insurance exchange. Employers with 50 to 99 employees are allowed
a transitional year; penalties will go into efect beginning in 2016. Tese employer requirements are controversial.
Supporters maintain the play or pay requirement will strengthen the employment-based system by giving more
workers access to improved health coverage. Critics maintain the requirement will increase business costs.
Survey results show most employers will continue to provide employees with health insurance in 2015 when the
provisions become efective (Exhibit 22). Nearly three-quarters of respondents (74%) report they defnitely will
continue to provide health care coverage for all full-time employees in 2015indicating a steady increase in conf-
dence since 2012, when this fgure was 46.2%. An additional 19.7% state they are very likely to continue to provide
health care coverage for all full-time employees in 2015. Fewer than 1% of respondents say they defnitely will not
provide coverage to all full-time employees in 2015, and only 2.2% say they are unlikely to. Smaller employers are
slightly more likely to be considering discontinuing coverage (Exhibit 23). Exhibit 24 reveals some uncertainty
regarding employer-sponsored coverage fve years from now, however, most organizations say they are somewhat
likely (20.7%), very likely (51%) or defnitely will (22.1%) continue coverage.
Among the respondents considering use of the exchanges in 2015, more are likely to continue to provide coverage
and encourage only some employees to take coverage through the exchanges as opposed to dropping coverage for
all employees (Exhibit 25). Only 4.3% of employers report they defnitely will continue to provide coverage but
encourage some employees to seek coverage through the exchanges in 2015An additional 20.4% say they are very
likely or somewhat likely to do so. Just 3.3% of employers are at all likely to drop coverage for all employees in 2015.
It is interesting to note that among the small group of 67 employers without employer-sponsored health insurance
in 2014, more than half (55.2%) say they very likely will ofer coverage in 2015. Another 19.4% say they are some-
what likely to do so.
Te 162 respondents that did not state that they defnitely will continue to provide coverage to all full-time em-
ployees in 2015 were asked to rate the likelihood of ofering a fnancial subsidy if coverage is dropped and the most
likely cause for discontinuing the coverage. Most organizations (70.4%) say they likely or defnitely would provide
a subsidy. (Exhibit 26). Te most common reason given for possibly discontinuing coverage is the cost becoming
too highcited by 57.4% of respondents (Exhibit 27). About one-quarter state the reason they would most likely
end coverage is if other organizations in their industry or geographic area discontinued coverage (19.8% and 3.7%,
respectively). Larger organizations are more likely to be concerned with the actions of others in their industry while
smaller organizations are more likely to be solely focused on costs (Exhibit 28).
Te 462 respondents that stated they defnitely will continue to provide coverage to all full-time employees were
asked their top reasons for maintaining coverage (Exhibit 29). Respondents overwhelmingly chose three reasons
for maintaining coverage: to retain current employees (76.8%), atract future talent (72.7%) and maintain/increase
employee satisfaction and loyalty (55%). Multiple respondents selected other and wrote that providing coverage
was simply the right thing to do ethically.
Only 3.8% of organizations currently use private exchanges for their full-time employees, but 16.5% are considering
this option (Exhibit 30).
EXHIBIT 22
Likelihood of Continuing Coverage for All Full-Time Employees by Year*
2012 2013 2014
(n=927) (n=879) (n=624)
Defnitely will 46.2% 68.5% 74.0%
Very likely 39.3% 25.0% 19.7%
Somewhat likely 9.8% 4.0% 3.7%
Somewhat unlikely 2.4% 1.6% 1.1%
Very unlikely 1.4% 0.5% 1.1%
Defnitely wont 1.0% 0.5% 0.3%
* In 2014, respondents were asked how likely their organization was to drop coverage for all employees and direct them to the
exchanges in 2015 (or 2016 for transitional employers).
EXHIBIT 23
Likelihood of Continuing Coverage for All Full-Time Employees by Employer Size*
More
(n=624) 0-50 51-499 than 500
Defnitely will 59.2% 68.0% 79.0%
Very likely 25.4% 25.5% 16.5%
Somewhat likely 8.5% 3.9% 2.8%
Somewhat unlikely 4.2% 2.0% 0.3%
Very unlikely 2.8% 0.7% 1.0%
Defnitely wont 0.0% 0.0% 0.5%
*In 2015 (or 2016 for transitional employers).
EXHIBIT 24
Likelihood of Offering Coverage Five Years From Now
(n=624)
Defnitely will 22.1%
Very likely 51.0%
Somewhat likely 20.7%
Somewhat unlikely 4.3%
Very unlikely 1.9%
Defnitely wont 0.0%
23
EXHIBIT 25
Likelihood of Taking Action With Exchanges*
(n=624)
Our organization will continue to provide coverage,
but we will encourage some employees to seek coverage through the exchanges.
Defnitely will 4.3%
Very likely 6.3%
Very unlikely 36.7%
Defnitely wont 23.1%
Our organization will drop coverage for all employees and direct them to the exchanges.
Defnitely will 0.0%
Very likely 0.6%
Very unlikely 13.1%
Defnitely wont 79.0%
*In 2015 (or 2016 for transitional employers).
EXHIBIT 26
Likelihood of Offering Subsidy if Coverage Is Discontinued*
(n=162)
Defnitely will 3.7%
Very likely 32.1%
Very unlikely 14.2%
Defnitely wont 4.3%
*Respondents that said they defnitely will continue coverage were not asked this question.
EXHIBIT 27
Likely Cause for Discontinuing Coverage*
(n=162)
The cost of providing coverage becoming too expensive 57.4%
Other organizations in our industry discontinuing coverage 19.8%
Employees voluntarily moving to the exchanges 7.4%
Exchanges are proving to provide adequate health coverage for individuals 4.3%
Other organizations in our geographic area discontinuing coverage 3.7%
Other 7.4%
EXHIBIT 28
Likely Cause for Discontinuing Coverage by Employer Size*
5,000-
(n=162) 0-50 51-499 500-4,999 9,999 10,000+
The cost of providing coverage becoming
too expensive 65.5% 63.3% 55.4% 43.8% 41.7%
Other organizations in our industry
discontinuing coverage 3.4% 16.3% 25.0% 25.0% 41.7%
EXHIBIT 29
Main Reasons to Continue Coverage*
(n=462)
To retain current employees 76.8%
To attract future talent 72.7%
To maintain/increase employee satisfaction and loyalty 55.0%
To maintain/increase productivity 16.0%
To maintain tax advantages (e.g., tax deductions, no increase in payroll taxes, etc.) 15.4%
To avoid paying penalties 13.4%
Other 3.9%
* Respondents were asked to select the top two reasons. Only those that said they will defnitely continue coverage were asked
this question.

25
EXHIBIT 30
Provide Coverage Through a Private Exchange for Full-Time Employees
(n=624)
Yes 3.8%
No 79.2%
Not sure 0.5%
27 27
VII. Retiree and Part-Time Employee Coverage
Employer strategies for retiree and part-time employee populations are examined in this section. More than one-
third of responding organizations (36.2%) provide some form of retiree coverage, while 63.8% ofer no coverage
to retirees (Exhibit 31). Most employers currently ofering retiree coverage have not made a frm decision whether
they will continue through 2015 (Exhibit 32). Seven in ten (69.6%) say they defnitely will or are very likely to
continue providing retiree coverage through 2015, and 15% are somewhat likely. Fewer than one in six (15.3%) are
somewhat unlikely, very unlikely or defnitely wont continue to provide coverage to retirees. Regarding private ex-
changes, 12.3% are currently using this option for retirees aged 65 and over, 8.8% have this in place for future retirees
and 8.4% are using for early retirees (ages 55-64) (Exhibit 33). An additional one-quarter (25.6%) are considering
private exchanges for early retirees (ages 55-64), 22.5% are considering for future retirees and 18.9% are considering
for retirees aged 65 and over.
More than one-third of responding organizations (36.2%) provide coverage to part-time employees (Exhibit 34).
Tree-quarters of organizations (74.4%) say they defnitely will or are very likely to continue providing coverage
to part-time employees through 2015, and 17.3% are somewhat likely (Exhibit 35). Less than one in ten (8.5%)
are somewhat unlikely, very unlikely or defnitely wont continue to provide coverage to part-time employees. Only
4.9% of organizations currently use a private exchange for their part-time employeesAn additional 11.5% are
considering this option (Exhibit 36).
EXHIBIT 31
Offer Coverage to Retirees*
(n=624)
Yes, for Medicare-eligible retirees (age 65 and older) 25.5%
Yes, for pre-Medicare-eligible early retirees (55-64 years old) 31.9%
No 63.8%
EXHIBIT 32
Likelihood to Continue Current Retiree Coverage*
(n=227)
Very likely 38.8%
Very unlikely 7.0%
Defnitely wont 2.6%
* Only respondents that currently have some form of retiree coverage were asked this question. Respondents were asked their
likelihood of continuing coverage through 2015.
EXHIBIT 33
Provide Coverage Through a Private Exchange for Retiree Groups*
(n=227)
Coverage for retirees aged 65 and over
Yes 12.3%
No 64.3%
Not sure/ not applicable 4.4%
Coverage for early retirees (ages 55 to 64)
Yes 8.4%
No 63.0%
Coverage for future retirees
Yes 8.8%
No 62.6%
*Only respondents that currently have some form of retiree coverage were asked this question.
29
EXHIBIT 34
Offer Coverage to Part-Time Employees
(n=624)
Yes 36.2%
No, we dont offer coverage to part-time employees 53.0%
No, we dont have part-time employees 10.7%
EXHIBIT 35
Likelihood to Continue Coverage for Part-Timers*
(n=226)
Very likely 36.3%
Very unlikely 3.1%
Defnitely wont 2.7%
* Only respondents that currently offer coverage for part-time employees were asked this question. Respondents were asked their
likelihood of continuing coverage through 2015.
EXHIBIT 36
Provide Coverage Through a Private Exchange for Part-Time Employees*
(n=226)
Yes 4.9%
No 82.7%
Not sure 0.9%
*Only respondents that currently offer coverage for part-time employees were asked this question.
31 31
VIII. Grandfathered Plans
If an organization had at least one individual enrolled in a group health plan or health insurance coverage when ACA
was frst enacted (March 23, 2010), the plan or coverage is considered grandfathered. Tese plans are generally
exempt from reform requirements such as frst-dollar preventive benefts, new grievance and appeals processes and
nondiscrimination provisions. Grandfathered plans also have delayed efective dates for certain changes.
Te portion of organizations with a primary plan that is grandfathered has steadily declined over the last four
yearsmoving from 44.6% in 2011 down to 17.8% in 2014 (Exhibit 37). Exhibit 38 shows that larger employers
are slightly more likely to maintain grandfathered status.
Because they will be able to make only limited health plan changes, maintaining grandfathered status can be a chal-
lenge for employers.
7
More than one in fve employers with a grandfathered plan (23.4%) anticipate their plan will
lose this status in 2015 or sooner (Exhibit 39).
When asked to identify up to two advantages of maintaining grandfathered status, respondents said the top advan-
tages are the exemption from the requirement to provide preventive care coverage with no cost sharing or annual
limits (25.2%) and the exemption from implementing the appeals process (15.3%) (Exhibit 40).
EXHIBIT 37
Portion of Plans With Grandfathered Status by Year
2011 (n=1,134) 44.6%
2012 (n=927) 34.3%
2013 (n=879) 27.3%
2014 (n=624) 17.8%
EXHIBIT 38
Currently Grandfathered by Employer Size
(n=624)
0-50 employees 14.1%
More than 50 employees 18.3%
7. Plans can lose grandfathered status for cuting or reducing benefts, raising coinsurance charges, raising copayment charges, raising
deductibles, lowering employer contributions and adding or tightening an annual limit on what the insurer pays.
EXHIBIT 39
Outlook for Maintaining Grandfathered Status
(n=111)
Will lose in 2014 5.4%
Will lose in 2015 18.0%
Do not expect to lose grandfathered status in the next two years 44.1%
Not sure 32.4%
EXHIBIT 40
Top Benefts of Maintaining Grandfathered Status*
(n=111)
Exempt from requirement to provide coverage for
specifed preventive care with no cost sharing or annual limits 25.2%
Exempt from implementing the appeals process required under ACA,
which includes external appeals 15.3%
Avoid essential benefts requirements applicable in 2014 14.4%
Avoid limiting participant annual out-of-pocket maximum in 2014 14.4%
Exempt from requirements to cover emergency services at nonnetwork
facilities without prior authorization and at the same cost-sharing levels as
in-network facilities 9.9%
Avoid application of Internal Revenue Code Section 105(h) nondiscrimination
rules to fully insured plans 7.2%
Avoid premium rating structure limitations for plans with less than 100 employees,
applicable in 2014 5.4%
Avoid 60% actuarial value minimum beneft requirements applicable in 2014 4.5%
Dont see value/benefts of being classifed as a grandfathered plan 16.2%
Not sure 24.3%
* Only respondents with grandfathered plans were asked this question. Respondents were asked to select up to two responses.
33 33
IX. Cost Impact
While the impact of ACA varies from one employer to the next, it is generally agreed the law will increase plan costs
in the short term. Te portion of employers that have conducted an ACA cost analysis has grown steadily from less
than half (47.2%) in 2012 to more than two-thirds (69.9%) in 2014 (Exhibit 41). Larger employers are more likely
to have conducted an analysis (Exhibit 42).
Exhibit 43 examines the costs of a specifc group of respondents that said they knew their exact cost change due to
ACA in 2014 and does not include respondents that estimated cost changes. Among this group, cost changes ranged
from an increase of 50% to an overall decrease in costs resulting from ACA in 2014. Te average cost increase among
this group is 6.8%, and the median cost increase is 4%.
Exhibit 44 displays costs for all responding organizationsincluding respondents that estimated costs. Most orga-
nizations (88.2%) expect the law will increase their health care costs this year. One in four (24.7%) estimates a cost
increase of 1% to 2%. A similar proportion (22.3%) predicts an increase of 3% to 4%. One in seven organizations
(14.4%) estimates a cost increase greater than 10%. Costs associated with ACA appear to be hiting smaller em-
ployers much harder than larger ones. Estimates of cost increases associated with ACA rose from 2012 to 2013 but
remained fairly consistent from 2013 to 2014 (Exhibit 45).
Respondents submited a wide range of responses when asked to share their organizations experience with ACA-
related health care cost changes for 2014, refecting the variation in cost impact displayed in Exhibit 46. On the one
hand, several respondents expressed maddening frustration with cost increases, describing how it made my stom-
ach turn or how the impact is akin to a sharp stick in the eye. On the other hand, some related a diferent experi-
ence saying, everything has been very positivewe welcome the changes. Most were somewhere in the middle
describing a minimal, or at least absorbable, impact this year but expressing concern for anticipated future costs.
Several respondents mentioned how insurance companies pass costs to plan sponsors, and several also mentioned
how their organizations pass costs to employees. A large number of respondents mentioned the tangible cost burden
associated with the transitional reinsurance and PCORI fees; a similar amount described the signifcant time and
efort they have devoted to keeping compliant with constantly changing provisions, saying the sof costs of admin-
istration and communication have been substantial. Lastly, one quote seemed to cleverly and concisely summarize
responses: Everyone says play or pay, . . . well we are playing AND paying.
Respondents identifed transitional reinsurance fee costs (42.9%), general ACA administrative costs (33.3%) and
increased PCORI fees (32.5%) as the top three ACA cost drivers for 2014. Multiple respondents selected other and
described the increased costs associated with new employees opting for plan coverage due to the individual mandate.
When asked which future provisions would increase costs the most, the top three responses were costs associated
with the excise tax on high-cost group health plans (17.3%), general ACA administrative costs (12.5%) and transi-
tional reinsurance fee costs (10.6%) (Exhibit 47).
Exhibit 48 reveals that more than two in fve employers (42.9%) expect 2015 to be the year that will produce the
greatest cost increases due to ACA. About one in fve (21%) expects 2018the year of the Cadillac taxto be the
year producing the greatest cost increases resulting from ACA. One in six (14.4%) expects costs to increase the most
this year (2014), and a similar portion (14.6%) is looking at 2016.
EXHIBIT 41
Conducted Analysis of ACA Costs by Year (Yes Responses)
2012 (n=927) 47.2%
2013 (n=879) 63.7%
2014 (n=624) 69.9%
EXHIBIT 42
Conducted Analysis of ACA Costs by Employer Size (Yes Responses)
(n=624)
0-50 53.5%
51-499 62.7%
500-4,999 71.5%
5,000-9,999 79.0%
10,000+ 86.7%
EXHIBIT 43
Cost Impact Due to ACA*
(n=224) Average Median Range
ACA cost impact 6.8% 4% Decreased costs
to Increased 50%
* Respondents were asked about 2014 costs directly associated with ACA. Only organizations that knew their exact cost change
were included in this table.
35
EXHIBIT 44
Cost Impact Due to ACA in 2014 by Employer Size*
500- 5,000-
(n=570) 0-50 51-499 4,999 9,999 10,000+ Total
Will decrease costs 2.9% 0.7% 1.7% 0.0% 1.5% 1.4%
No change 11.6% 9.6% 12.0% 6.8% 9.2% 10.4%
Increase costs 1%-2% 5.8% 14.1% 31.4% 35.6% 32.3% 24.7%
Increase costs 3%-4% 11.6% 24.4% 24.8% 20.3% 21.5% 22.3%
Increase costs 5%-6% 10.1% 19.3% 13.2% 18.6% 18.5% 15.4%
Increase costs 7%-10% 14.5% 14.8% 9.5% 10.2% 9.2% 11.4%
Increase costs more than 10% 43.5% 17.0% 7.4% 8.5% 7.7% 14.4%
* Respondents were asked about 2014 costs directly associated with ACA. Not sure responses were excluded to provide clearer
interpretation. Organizations that have not analyzed the cost implications were asked to estimate.
EXHIBIT 45
Cost Impact Due to ACA by Year*
2012 2013 2014
(n=761) (n=715) (n=570)
Will decrease costs 1.6% 0.7% 1.4%
No change 13.7% 11.0% 10.4%
Increase costs 1%-2% 31.1% 24.6% 24.7%
Increase costs 3%-4% 24.2% 22.8% 22.3%
Increase costs 5%-6% 11.8% 14.0% 15.4%
Increase costs 7%-10% 9.2% 10.1% 11.4%
Increase costs more than 10% 8.4% 16.8% 14.4%
* Respondents were asked about costs directly associated with ACA. Not sure responses were excluded to provide clearer
interpretation. Organizations that have not analyzed the cost implications were asked to estimate.
EXHIBIT 46
Provision With Most Signifcant Cost Increases for 2014*
(n=624)
Transitional reinsurance fee costs 42.9%
General ACA administrative costs 33.3%
Increased Patient-Centered Outcomes Research Institute (PCORI) fees 32.5%
Costs associated with plan design changes related to ACA
(including a plan redesign to avoid the 2018 excise Cadillac tax) 18.9%
Health insurance provider fees 18.1%
New costs associated with reporting, disclosure and notifcation requirements
(i.e., beyond previous years costs) 15.4%
New costs associated with age 26 coverage requirement
(i.e., new adult children have been added to the plan in 2013) 13.8%
Costs associated with increased need for communication and resources spent
interacting with participants regarding ACA 13.1%
Costs of eliminating annual limits on essential health benefts 9.1%
Costs of limiting annual participant out-of-pocket maximums to the
amounts specifed by ACA. 9.0%
Ongoing costs associated with no cost sharing for preventive care provision
(i.e., beyond previous years costs) 8.7%
Costs of adjusting benefts to keep up with affordability requirement 8.5%
Costs associated with eliminating all preexisting condition exclusions for all enrollees 8.5%
Costs of now providing health insurance to individuals who previously
were not offered coverage in order to comply with 2015/16 coverage requirement 7.9%
Costs of complying with 90-day-or-less waiting period 6.9%
Up-front costs associated with adoption of new wellness and
preventive care initiatives/incentives due to ACA 5.6%
Costs associated with a loss of grandfathered status triggering new ACA requirements 5.4%
Costs of adjusting benefts to keep up with minimum value requirement 5.3%
Eligibility or claims auditing/analysis costs due to ACA 5.3%
Costs associated with changing funding approach due to ACA
(e.g., becoming self-funded or purchasing stop-loss insurance) 1.4%
Other 4.0%
*Respondents were asked to select the top three cost drivers.

37
EXHIBIT 47
Forthcoming Provision With Most Signifcant Cost Increases*
(n=624)
Costs associated with the excise tax on high-cost group health plans
(a.k.a. Cadillac tax) 17.3%
General ACA administrative costs 12.5%
Transitional reinsurance fee costs 10.6%
Costs associated with plan design changes related to ACA 8.7%
Health insurance provider fees 6.6%
Costs of now providing health insurance to individuals who previously
were not offered coverage in order to comply with 2015/16 coverage requirement 6.3%
Costs of adjusting benefts to keep up with affordability requirement 5.4%
Costs associated with reporting, disclosure and notifcation requirements 4.8%
PCORI fees 3.8%
Ongoing costs associated with eliminating all preexisting condition
exclusions for all enrollees 3.5%
Costs associated with requirement to autoenroll new hires into a health plan 2.9%
Costs of adjusting benefts to keep up with minimum value requirement 2.6%
Costs associated with a loss of grandfathered status triggering new ACA requirements 2.6%
Costs associated with increased need for communication and resources
spent interacting with participants regarding ACA 1.9%
Ongoing costs associated with no cost sharing for preventive care provision 1.9%
Costs of penalty for not providing affordable or minimum-value coverage
to full-time employees and dependents (i.e., $3,000 penalty) 1.4%
New costs associated with age 26 coverage requirement
(i.e., new adult children will be added to the plan in 2015 or beyond) 1.3%
Up-front costs associated with adoption of new wellness and
preventive care initiatives/incentives due to ACA 1.1%
Eligibility or claims auditing/analysis costs due to ACA 0.8%
Costs associated with changing funding approach due to ACA
(e.g., becoming self-funded or purchasing stop-loss insurance) 0.5%
Costs of penalty for not providing minimum essential health care
coverage to full-time employees and dependents (i.e., $2,000 penalty) 0.2%
Other 3.4%
*Respondents were allowed to select only one top future cost driver.
EXHIBIT 48
Year of Largest Expected Cost Increases
(n=624)
2013 or prior 4.2%
This year (2014) 14.4%
Next year (2015) 42.9%
2016 14.6%
2017 2.9%
2018 21.0%
39 39
X. Demographics
Individuals invited to participate in the 2014 survey were single employer (including corporate) representatives in
the databases of the International Foundation and the International Society of Certifed Employee Beneft Special-
ists (ISCEBS). Responses were received from 691 individuals including benefts and human resources professionals,
general and fnancial managers and other professionals. Exhibits 49 through 52 present demographic characteristics
of the respondents organizations. Surveyed organizations were asked in which type of medical plan the majority of
their participants are enrolled (Exhibit 49). More than half (53.3%) state most of their employees are enrolled in a
preferred provider organization (PPO). Nearly one in four (22.8%) uses some sort of HDHP as their primary medi-
cal planFewer than 1% use an HDHP with no account, while 22.4% use an HDHP with an HSA or HR.
8

Exhibit 50 shows that organizations from all regions of the country were represented in the survey: Midwest
(31.3%), Northeast/Mid-Atlantic (26.2%), South (23.1%) and West (19.2%). Surveyed organizations are dispersed
across all employer-size categories (Exhibit 51). Most common were those with between 500 and 4,999 benefts-
eligible employees (41.8%) followed by those with 51-499 employees (24%). As shown in Exhibit 52, a wide range
of industries is represented by the responding organizations. Most frequent are those from insurance and related
felds (16.4%), manufacturing and distribution (13.7%), and health care and medicine (10.6%).
8. A high-deductible health plan (HDHP) is a lower cost insurance arrangement that features a higher annual deductible than that of a
traditional health insurance arrangement. HDHPs were created to provide afordable coverage for health events that might result in fnancial
havoc on a household. With an HDHP, the insured pays for nearly all medical expenses until the annual deductible amount is reached.
Te deductible is usually at least $1,000; then traditional health insurance coverage begins. An HDHP may be ofered with a health savings
account (HSA) or a health reimbursement arrangement (HR). An HSA is a tax-exempt trust or custodial account established for individuals
who are covered under an HDHP meeting specifc federal requirements. Contributions to the account may be made by the employer and/
or the employee. Te employee, not the employer, owns the account, which makes the account portable. An HR is a tax-exempt arrange-
ment established by and funded by employers for employees and retirees to pay qualifed medical expenses. Money remaining in a HR at
year-end can roll over and be used to cover future medical costs, but the portability of the account is lef to the discretion of the employer.
EXHIBIT 49
Plan With Majority Enrolled
(n=691)
Do not offer coverage 2.6%
Traditional indemnity/fee-for-service plan 1.3%
Preferred provider organization (PPO) 53.3%
Health maintenance organization (HMO) 9.6%
HDHP with HSA 16.8%
HDHP with HRA 5.6%
HDHP without account 0.4%
Point-of-service plan (POS) 7.4%
Exclusive provider organization (EPO) 3.0%
EXHIBIT 50
Region*
(n=691)
Midwest 31.3%
Northeast/Mid-Atlantic 26.2%
South 23.1%
West 19.2%
* Regions are comprised as follows: Midwest (IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI), Northeast/Mid-Atlantic (CT, DE, DC,
ME, MD, MA, NH, NJ, NY, PA, RI, VA, VT, WV), South (AL, AR, FL, GA, KY, LA, MS, NC, NM, OK, SC, TN, TX), West (AZ, AK, CA, CO,
HI, ID, MT, NV, OR, UT, WA, WY).
EXHIBIT 51
Number of Eligible Employees
(n=691)
0-50 13.5%
51-499 24.0%
500-4,999 41.8%
5,000-9,999 9.3%
10,000 or more 11.4%
41
EXHIBIT 52
Primary Industry
(n=691)
Accommodation/food service 2.0%
Agriculture 0.4%
Arts/entertainment/recreation 1.7%
Banking/fnance 5.8%
Communication/telecommunications 2.0%
Construction 1.4%
Education 6.1%
Energy/utilities/mining 5.1%
Health care/medicine 10.6%
High technology 4.6%
Insurance-related 16.4%
Manufacturing/distribution 13.7%
Nonproft 10.4%
Professional services 8.2%
Real estate-related 0.9%
Retail/wholesale trade 5.4%
Transportation 1.6%
Other services 2.0%
Multiple industries 2.0%
2014 Employer-Sponsored Health Care: ACAs Impact is the ffh in a series of reports on the impact of health care
reform legislation on single employer beneft plans by the International Foundation of Employee Beneft Plans.
Readers are encouraged to watch for upcoming studies and to monitor the Foundations website, www.ifebp.org, for
the latest ACA news, analysis and additional resources.

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