ACA Survey

5/22/2018 ACA Survey

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2014Employer-SponsoredHealth Care:

ACAs Impact S U R V E Y R E S U L T


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Tis survey repor was prepared by he Inernaional Foundaion o Employee Benefi Plans. Alhough grea carewas aken in researching he inormaion in his repor and he underlying sources are considered o be reliable, heaccuracy and compleeness o he repor canno be guaraneed.

Tis publicaion is sold wih he undersanding ha he publisher is no engaged in rendering any business, financial,invesmen or oher proessional advice or service. Tis repor is no a subsiue or he services o a proessional,nor should i be used as a basis or any decision or acion ha may affec your business. Consul a qualified proes-sional. Te Inernaional Foundaion shall no be responsible or any loss susained by any person who relies on hispublicaion.

Writen and compiled byNeil Mrkvicka

Jusin Held, CEBSJulie Sich, CEBS

Edied byKahy Bergsrom

Copies o his repor may be obained romPublicaions DeparmenInernaional Foundaion o Employee Benefi Plans18700 Wes Bluemound oadBrookfield, WI 53045

Call (888) 334-3327, opion 4, or price inormaion or see www.iebp.org/booksore.

Published in 2014 by he Inernaional Foundaion o Employee Benefi Plans, Inc.

2014 Inernaional Foundaion o Employee Benefi Plans, Inc.All righs reserved.ISBN 978-0-89154-744-0

Prined in he Unied Saes o America

RS140681614


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2014 Employer-Sponsored Health Care: ACAs Impact: Survey Results | ii

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

About the International Foundation of Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

About the International Society of Certified Employee Benefit 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


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| International Foundation of Employee Benefit Plansii

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 . . . . 22Exhibit 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Exhibit 39: Outlook for Maintaining Grandfathered Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Exhibit 40: Top Benefits 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


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2014 Employer-Sponsored Health Care: ACAs Impact: Survey Results | 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 Significant Cost Increases for 2014 . . . . . . . . . . . . . . . . . . . . . . . . . 36

Exhibit 47: Forthcoming Provision With Most Significant 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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2014 Employer-Sponsored Health Care: ACAs Impact: Survey Results | v

Acknowledgments

We are very graeul o he indusry expers who iniially reviewed he survey quesionnaire and he individuals whoconribued heir ime o complee he survey.

About the International Foundation of Employee Benefit PlansTe Inernaional Foundaion o Employee Benefi Plans is a nonprofi organizaion, dedicaed o being a leadingobjecive and independen global source o employee benefis and compensaion educaion and inormaion. oalmembership includes 33,000 individuals represening muliemployer rus unds, corporaions, public employergroups and proessional advisory firms hroughou he Unied Saes and Canada. Each year, he InernaionalFoundaion offers over 100 educaional programs, including conerences and e-learning courses. Membershipprovides access o personalized research services and daily news delivery. Te Inernaional Foundaion sponsorshe Cerified Employee Benefi Specialis (CEBS) program in conjuncion wih he Wharon School o heUniversiy o Pennsylvania and Dalhousie Universiy in Canada.

About the International Society of Certified Employee Benefit SpecialistsTe Inernaional Sociey o Cerified Employee Benefi Specialiss (ISCEBS) is a membership organizaion orhose who have earned or are pursuing he Cerified Employee Benefi Specialis (CEBS), group benefis associae(GBA), reiremen plans associae (PA) and compensaion managemen specialis (CMS) designaions. Membershave access o educaional programs, inormaion resources, neworking a he local and naional levels, publicaionsand oher services. Nearly 4,000 CEBS, GBA, PA and CMS designees are members o ISCEBS; hey work orcorporaions, consuling firms, muliemployer unds, insurance companies and in oher indusry proessions.

About Research at the International Foundation

Te Inernaional Foundaion conducs, wries and disseminaes research sudies, surveys and special repors on

a range o benefis, compensaion and financial lieracy issues. Te purpose o Inernaional Foundaion researcheffors is o enhance he capaciy o is members and consiuens o undersand, design and deliver employee

benefis ha improve he financial securiy o plan paricipans and employees. esearch programs includebenchmarking sudies, atiudinal surveys, special repors, ho opic surveys and collaboraive projecs.


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2014 Employer-Sponsored Health Care: ACAs Impact: Survey Results | 11

On April 17, 2014, he Inernaional Foundaion o Employee Benefi Plans deployed is fifh survey in a series onhow single employer plans are being affeced by he Affordable Care Ac (ACA). 1Te surveys are in-deph sudieso how single employers wih healh care plans are responding o he challenges and opporuniies presened by

ACA. Te firs survey, conduced in May 2010, emphasized employers immediae consideraions and approachesor complying wih he new law. Te second, hird and ourh surveys ocused on he acions employers ook in2011, 2012 and 2013.

2014 Employer-Sponsored Health Care: ACAs Impactocuses on he mos imporan healh care reorm issues acingemployers his year. opics addressed include employer concerns abou plan design and unding, mehods or com-municaing wih employees, grandahered plan saus, reacions o healh insurance exchanges, cos-managemeniniiaives and he poenial impac on healh care benefi coss.

Tose asked o paricipae in he 2014 survey were single employer plans (including corporaions) in he daabaseso he Inernaional Foundaion and he Inernaional Sociey o Cerified Employee Benefi Specialiss (ISCEBS). 2Survey responses were received rom 691 human resources and benefis proessionals and indusry expers. Tesurveyed organizaions represen a wide base o U.S. employers rom nearly 20 differen indusries. Insurance andrelaed fields (16.4%) and manuacuring and disribuion (13.7%) are mos represened. Surveyed employers rangein size rom ewer han 50 employees o more han 10,000. Te demographic characerisics o he respondens inhe 2010 o 2013 surveys were very similar o hose in he 2014 survey. In several places hroughou his repor,comparison daa is displayed by employer size and by years. We urge readers o exercise cauion when inerpreingcomparison daa rom previous surveys because o he naure o he sample designs and poenial nonresponse er-

ror.Tis repor has nine secions beyond his inroducion. Secion II provides key findings. Deailed findings are pre-sened in Secions III hrough VIII. Secion III discusses employers general saus in response o ACA. Sraegies,acions and iniiaives employers are adoping due o ACA are examined in Secion IV. Secion V discusses waysemployers are communicaing wih heir paricipans abou reorm. Secion VI ocuses on employers reacions ohe opening o he healh insurance exchanges. eiree and par-ime employee coverage opions are examined inSecion VII. Employer perspecives on grandahered plans are examined in Secion VIII. Te cos impac o ACA isexamined in Secion IX. Secion X discusses he demographic profile o respondens.

Tis survey is the fifh in a series o reports on the impact o ACA on single employer benefit plans. eaders are encouragedto watch or additional reports that help plan sponsors benchmark their benefit programs and practices against other plans.

1. Elecronic survey deploymen began April 17, 2014 and was concluded May 6, 2014. 2. Single employer plansare mainained by one employer or by relaed paries such as a paren company and is subsidiaries.

I. Introduction


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II. Key Findings

Tis secion presens major survey findings concerning ACAs impac on single employer plans. Compleed respons-es were received rom 691 individuals represening single employer plans (including corporaions). Atenion isgiven o employers saus in response o ACA, heir communicaions wih plan paricipans regarding reorm, cosimplicaions, cos managemen iniiaives, reacions o healh insurance exchanges and grandahered plan saus.

Te survey includes quesions posed in he conex o Wha are you doing wih your plan as a resul o ACA? Tereader is cauioned ha some o he changes employers are making may no be direcly influenced by healh carereorm, alhough hey may be a by-produc (i.e., i ACA is causing oher coss o increase, employers may makechanges o benefis no oherwise affeced by healh care reorm o offse hose increases).

General Focus and Reactions to ACA

More han one-hird o organizaions describe heir curren saus as complian and developing some acicso deal wih he implicaions o reorm. One in five describes is saus as complian wih a muliyear ap-proach o deal wih implicaions o reorms. On he oher end o he specrum, abou one in six organizaionsis jus ocused on atemping o keep complian wih each new provision going ino effec.

Smaller organizaions, ypically wih ewer resources, are less likely o have developed muliyear approacheso deal wih ACA.

More han hal o respondens believe ACA has had an overall negaive effec on heir organizaion hus ar,and wo-hirds o respondens believe ACA will have an overall negaive effec on heir organizaion in heuure.

Strategies, Actions and Initiatives

Te vas majoriy o larger employers appear unineresed in making broad workorce adjusmens in re-sponse o ACA. However, among employers wih 50 or ewer employees, nearly one in six has reduced is

workorce due o ACA coss, more han one in en has adjused hours so ewer employees qualiy as ull-ime,more han one in en roze/reduced pay raises/compensaion, and one in en has reduced hiring in order osay under he 50-employee ACA hreshold or small employers.

Nearly one-hird o organizaions have increased ou-o-pocke limis, increased paricipans share o pre-mium coss and/or increased in-nework deducibles in response o ACA. More han one in five organiza-ions have increased copaymens or coinsurance or primary care and/or increased employee proporionso dependen coverage coss. Compared wih las year, organizaions are implemening cos-conainmenmeasures a a much higher rae.

Nearly one in five organizaions has adoped or expanded wellness iniiaives due o ACA, and anoher 22%plan on doing so in he nex 12 monhs. More han one in en organizaions has already begun offering he in-creased wellness incenives allowed by ACA his year, and an addiional wo in five are considering doing so.


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| International Foundation of Employee Benefit Plans4

Less han 5% o organizaions have added or expanded heir use o a bare bones mini-medical plan ordropped spousal coverage because o ACA.

More han one in our organizaions are increasing heir emphasis on a high-deducible healh plan (HDHP)wih a healh savings accoun (HSA), and 16% are assessing he easibiliy o adding one. Larger organiza-ions are more likely o be increasing heir emphasis on HDHPs compared wih smaller organizaions.

Nearly all surveyed organizaions (96%) currenly mee he minimum value requiremen, and 91% currenlymee he affordabiliy requiremen. Nine in en organizaions currenly mee boh es requiremens.

One-quarer o organizaions have already sared o redesign heir primary healh plan o avoid riggering he2018 ax, and more han one-hird are considering acion. Te percenage o organizaions redesigning heirhealh plans o avoid riggering he excise ax has seadily increased since 2011, and larger organizaions aremore likely o be aking his acion.

Te porion o organizaions wih a primary plan ha is grandahered has seadily declined over he las ouryearsmoving rom 45% in 2011 o 18% in 2014and more han one in five employers wih a granda-hered plan anicipae heir plan will lose his saus in 2015 or sooner.

ACA Communication Annual enrollmen maerials, e-mails, company websies, special meeings and special writen communica-

ion pieces are he mos popular channels or communicaing wih employees abou ACA.

Te bigges obsacles o communicaing wih paricipans abou ACA are conusion and a lack o ineresamong paricipans.

More han hal o organizaions have noiced an increase in he number o quesions abou ACA rom aciveemployees o human resources and benefis saff in he las 12 monhs. espondens say he mos commonquesions are relaed o he healh insurance exchanges (e.g., How do he exchanges work? Am I eligible? Arehey ree? Could I qualiy or a subsidy? How does exchange coverage compare o my curren coverage?).

Hal o organizaions believe heir employees undersanding o ACA is average, and abou one-hird believeundersanding is poor or very poor. On he oher hand, more han wo in five organizaions believe ACA hasincreased heir employees engagemen/ineres in heir healh care.

Compared wih larger organizaions, smaller organizaions are noicing more quesions rom paricipans,greaer paricipan undersanding o ACA and increased paricipan engagemen/ineres in heir healh caredue o ACA.

Reactions to Health Insurance Exchanges

Nearly hree-quarers o respondens repor hey definiely will coninue o provide healh care coverage orall ull-ime employees in 2015indicaing a seady increase in confidence in employer-sponsored coveragesince 2012 when his figure was below one-hal. An addiional one in five repors being very likely o coninueo provide healh care coverage or all ull-ime employees in 2015Less han 1% o respondens say heydefiniely will disconinue coverage o all ull-ime employees in 2015.

espondens overwhelmingly chose hree reasons or mainaining coverage: o reain curren employees, oatrac uure alen and o mainain/increase employee saisacion and loyaly.

Tere is some uncerainy regarding employer-sponsored coverage five years rom now; however, mos orga-nizaions say hey likely will coninue coverage.


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Mos organizaions say hey likely or definiely will provide a subsidy i hey disconinue coverage in heuure.

Te mos common reasons given or poenially disconinuing coverage are he cos becoming oo highand i oher organizaions in heir indusry disconinue coverage. Larger organizaions are more likely o beconcerned wih he acions o ohers in heir indusry while smaller organizaions are more likely o be solely

ocused on coss. Seven in en employers currenly offering reiree coverage say hey definiely will or are very likely o coninue

providing reiree coverage hrough 2015, and hree-quarers o organizaions providing coverage o par-imeemployees say hey definiely will or are very likely o coninue providing coverage o par-ime employeeshrough 2015.

egarding privae exchanges, 12% currenly use his opion or reirees aged 65 and over, 9% have his inplace or uure reirees, and 8% use privae exchanges or early reirees (55-64 years old). An addiional one-quarer are considering privae exchanges or early reirees, 23% are considering he opion or uure reirees,and 19% are considering privae exchanges or reirees aged 65 and over.

Less han 5% o responding organizaions currenly use privae exchanges or heir ull-ime or par-ime em-ployees, bu 17% are considering his opion or ull-ime employees, and 12% are considering i or par-imeemployees.

Cost Impact

Te porion o organizaions ha have conduced an ACA cos analysis has grown seadily rom less hanone-hal in 2012 o more han wo-hirds in 2014. Larger employers are more likely o have conduced ananalysis.

Among all organizaions, nearly nine in en expec he law will increase heir organizaions healh care cosshis year. One in our esimaes a cos increase o 1% o 2%, and a similar proporion predics an increase o3% o 4%. One in seven organizaions esimaes a cos increase greaer han 10%. Te median cos increase is4% among organizaions ha know heir exac 2014 cos change due o ACA.

ACA-relaed coss are hiting smaller employers much harder han larger ones.

Esimaes o ACA-associaed cos increases rose rom 2012 o 2013 bu remained airly consisen rom 2013o 2014.

ransiional reinsurance ee coss, general ACA adminisraive coss and increased Paien-Cenered Ou-comes esearch Insiue (PCOI) ees are he op hree ACA cos drivers or 2014.

Te excise ax on high-cos group healh plans (a.k.a. Cadillac tax), general ACA adminisraive coss andransiional reinsurance ee coss are he op hree ACA cos drivers beyond 2014.

More han wo in five employers expec 2015 o be he year ha will produce he greaes cos increases dueo ACA. Abou one in five expecs 2018he year o he excise ax on high-cos group healh planso be

he year producing he greaes cos increases. One in six expecs coss o increase he mos his year (2014).


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III. General Focus and Reactions to ACA

Tis secion o he survey repor examines employers general response o and sraegies concerning ACA. Organi-zaions are a various sages assessing he impac o and developing approaches o healh care reorm. As shown inExhibi 1, more han one-hird (36.8%) describe heir curren saus as complian and developing some acics odeal wih he implicaions o reorm. One in five (20.4%) describes is saus as complian and having a muliyearapproach o deal wih implicaions o reorms. On he oher end o he specrum, 17.1% o organizaions are jus o-cused on atemping o keep complian wih each new provision going ino effec. Exhibi 2 shows smaller organiza-ions, ypically wih ewer resources, are less likely o have developed muliyear approaches o deal wih ACA.

More han hal o respondens (54.1%) believe ACA has had an overall negaive effec on heir organizaion hus ar(41.2% somewha negaive; 12.9% very negaive) (Exhibi 3). Abou one-hird (35.3%) describe ACAs effec onheir organizaion hus ar as neural, and 10.6% say he effec has been posiive. Looking oward he uure, wo-hirds o respondens (66%) predic ACA will have an overall negaive effec on heir organizaion (47.3% some-

wha negaive; 18.7% very negaive). One in five (19.8%) orecass a neural effec, while 14.1% believe he effecwill be posiive.

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%


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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%


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IV. Strategies, Actions and Initiatives

Effecive January 1, 2015, ACA requires mos employers o offer affordable healh care coverage o ull-ime em-ployees or pay a penaly. Full-ime employmen is defined as 30 or more hours o work per week. Te vas majoriyo surveyed employers (90% or 624 oal respondens) offer medical benefis o employees who work more han 30hours on average per week. Te remaining survey resuls ocus primarily on his group providing medical benefis.

Tis secion examines changes in organizaional sraegy, plan design and iniiaives o curb anicipaed rising coss.espondens were asked abou workorce adjusmens hey planned o make in response o ACA. Te vas major-iy o larger employers appear unineresed in such adjusmens; however, employers wih 50 or ewer employeesare aking some acions (Exhibi 4). Among employers wih 50 or ewer employees, 15.5% have reduced heir

workorce because o coss direcly associaed wih ACA, and 9.9% have reduced hiring in order o say under he50-employee ACA hreshold or small employers. More han one in en employers wih 50 or ewer employees haveadjused hours so ewer employees qualiy or he ull-ime employee medical insurance requiremen (11.3%) and/or roze/reduced pay raises/compensaion (11.3%).

espondens were asked wheher heir organizaions had increased or plan o increase paricipan cos sharing oconain coss. Nearly one-hird (32.4%) have increased ou-o-pocke limis (Exhibi 5). Slighly lower proporionsrepor hey have increased paricipans share o premium coss (30.3%) and in-nework deducibles (29.6%). Morehan one in five organizaions have increased copaymens or coinsurance or primary care (23.6%) and/or increasedemployee proporions o dependen coverage coss (20.4%). In he nex 12 monhs, an addiional 16.7% plan oincrease he employee porion o dependen coverage cos, and 16.3% plan o increase ou-o-pocke limis. Amonghe oher changes in cos sharing planned are increasing in-nework deducibles (15.1%), increasing paricipans

share o premium coss (14.7%) and increasing paricipans share o prescripion drug coss (14.1%). Exhibi 6shows ha, compared wih las year, organizaions are implemening cos-conainmen measures a a considerablyhigher rae.

Nearly one in five organizaions (18.1%) has adoped or expanded wellness iniiaives because o ACA, and anoher22.3% plan on doing so in he nex 12 monhs (Exhibi 7). When asked abou oher plan design/uilizaion changesspurred by ACA, abou one in six (16.3%) repors adoping or expanding he use o financial incenives o encour-age healhy behaviors, and anoher 19.6% plan on doing so in he nex 12 monhs. Lower proporions repor heyhave adoped a disease managemen program (8.5%). Less han 5% o organizaions have added or expanded heiruse o a bare bones mini-medical plan (3.8%) or dropped spousal coverage (3.8%).

Nearly one-quarer o surveyed organizaions (22.6%) have conduced dependen eligibiliy audis or plan o do

so in he nex 12 monhs as a resul o ACA (Exhibi 8). Anoher 23.2% have conduced or plan o conduc claimsuilizaion, while 14.5% have conduced or plan o conduc healh care claims audis.

One in our organizaions (26.9%) is increasing emphasis on an HDHP wih a healh savings accoun (HSA), while16% are assessing he easibiliy o adding his opion (Exhibi 9). Lower proporions repor hey are increasingemphasis on or assessing he easibiliy o adding an HDHP wih a healh reimbursemen arrangemen (HR)(16.8%) or an HDHP wih no accoun (10.5%). Larger organizaions are more likely o be increasing heir empha-sis on HDHPs compared wih smaller organizaions.


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Te reasury Deparmen and Inernal evenue Service (IS) have published a proposed rule implemening ACAsemployer shared responsibiliy penaly. Te rule consiss o boh affordabiliy and value requiremens. Generally, aplan wih a 60% acuarial value mees he minimum value requiremen. Coverage mees he affordabiliy require-men i he employee porion o sel-only premiums or an employers lowes cos coverage (meeing he minimum

value sandard) does no exceed 9.5% o he employees household income. espondens were asked wheher heirplans currenly mee hese requiremens (Exhibi 10). Nearly all surveyed organizaions (96.2%) currenly mee

he minimum value requiremen, and 91.2% mee he affordabiliy requiremen. Nine in en organizaions (90.1%)mee boh es requiremens.

As shown in Exhibi 11, ACA has no promped plan unding changes or a large majoriy o responding employers(89.4%). Some employers ha use sel-unding may choose o limi poenial medical claims exposure by purchas-ing sop-loss insurance in case claims exceed a predeermined amoun or an individual paricipan or he eniregroup.3A small porion o organizaions (7.9%) have added sop-loss insurance.

In 2014, employers will be permited o offer employees incenives o up o 30% o he cos o healh plan coverageor paricipaing in a wellness program and meeing cerain healh-relaed sandards.4An incenive o as much as50% will be permited o preven or reduce obacco use. More han one in en organizaions (12.2%) have already

begun offering he increased incenives, and an addiional 40.1% are considering doing so (Exhibi 12).

Saring in 2018, ACA imposes a nondeducible excise ax on employers wih high-cos healh plans.5 High-cosplans are defined as any healh-relaed coverage in which combined employer/employee premiums exceed $10,200or single coverage or $27,500 or amily coverage.6 While he 2018 deadline is several years away, Exhibi 13 showsha 24.5% o responding organizaions have already sared o redesign heir primary healh plan o avoid riggeringhe 2018 ax. An addiional 37.2% are considering acion. Exhibis 14 and 15 show here has been a seady increasein organizaions redesigning heir healh plans since 2011 o avoid riggering he excise ax, and larger organizaionsare more likely o be aking acion. In an open-ended ollowup quesion, he mos common redesign sep idenified

by organizaions ha have sared o redesign heir plans was reducing benefis and/or shifing coss o employees(i.e., increasing employee conribuions, deducibles, copays, coinsurance and ou-o-pocke maximums). Ohercommon redesign hemes among employers were: moving o a consumer-driven healh plan (CDHP), droppinghigher cos plan opions and adding more affordable plan opions. A ew respondens menioned adoping well-ness and prevenive iniiaives, and a couple more are considering a defined conribuion approach wih a privaeexchange.

3. Insurance coverage ha caps he oal claims experience o he group is known as aggregate stop-loss.An organizaion migh alsolimi is liabiliy using specific sop-loss, which ses a limi on he amoun ha a plan sponsor will pay or an individual case. 4. Prior o 2014, he allowed incenive level was 20%. 5. Te nondeducible excise ax will equal 40% o he premium cos in excess o he annual limi ($10,200 or single coverage and$27,500 or amily coverage). 6. Boh figures will be indexed or inflaion.


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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 ACAHave 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 specifically due to ACA. Other response options included: made nochanges, were unsure, or the question was not applicable.


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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%

Plan on using in the next 12 months 14.1%Modify/add tiers to cost-sharing structure

Have used 10.9%


Increase voluntary (employee-pay-all) benefit offerings

Have used 8.0%


Structure premiums based on income

Have used 3.4%Plan on using in the next 12 months 5.4%



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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) benefit offerings 4.3% 8.0%

Structure premiums based on income 2.6% 3.4%

*Respondents were asked about the actions they have taken specifically 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 financial 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%




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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

Increasing emphasis 7.7%

Assessing feasibility of adding 9.1%

Assessing feasibility of dropping 0.8%

Decreasing emphasis 1.9%

HDHP with no account

Increasing emphasis 3.8%Assessing feasibility of adding 6.7%

Assessing feasibility of dropping 0.3%

Decreasing emphasis 0.6%

*Respondents were asked about the actions they have taken specifically due to ACA. Remaining respondents answered Nochange or Not applicable.


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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 specifically 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.


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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%


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V. ACA Communication

Secion V examines employer communicaion and employee engagemen wih ACA. Mos employers (71%) useannual enrollmen maerials o communicae wih employees abou ACA (Exhibi 16). E-mails sen o employees(61.7%), a company websie (39.9%), special meeings (32.1%) and special writen communicaion pieces (31.6%)are also popular channels o communicaion. Larger organizaions are more likely o communicae via annual enroll-men and company websies, while smaller organizaions are more likely o communicae hroughou he year andhrough special meeings. Paricipan conusion (56.4%) and lack o ineres (39.6%) are he bigges obsacles ocommunicaing abou ACA (Exhibi 17). Some o he common hemes among oher responses submited wereemployees orming ideas afer lisening o media pundis (posiive and negaive), governmens inabiliy o sick ois own deadlines and general language barriers explaining ACA o non-English-speaking populaions.

Exhibi 18 shows how ACA ineres among employees has increased in he las 12 monhs. More han hal o orga-nizaions (52.4%) have noiced an increase in he number o ACA-relaed quesions human resources and benefissaff have received rom acive employees. Very ew organizaions (3.5%) have seen a decrease in quesions abou

ACA. espondens say he mos common quesions rom employees are relaed o he healh insurance exchanges(e.g., How do he exchanges work? Am I eligible? Are hey ree? Could I qualiy or a subsidy? How does exchangecoverage compare o my curren coverage?) (Exhibi 19). Oher requenly asked quesions include: How does helaw affec me/Do I need o do anyhing? Wha will his cos me/Why are my coss going up? Is he company plan-ning o drop coverage? How will our benefis change/Is his benefis change because o ACA?

Exhibi 20 shows ha one-hal o organizaions (49.8%) believe heir employees undersanding o ACA is jusaverage, while abou one-hird (32.2%) rae heir employees undersanding as poor or very poor (23.2% and 9%,

respecively). On he oher hand, more han wo in five organizaions (42.6%) believe ACA has increased heiremployees engagemen/ineres in heir healh care (Exhibi 21). Smaller employers are more likely o repor moreparicipan quesions, greaer employee undersanding o ACA and increased paricipan employee engagemen/ineres in heir healh care compared wih larger organizaions.


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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 difficulty keeping up with each new pieceof the law and regulations 34.1%

Organization is having difficulty 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%



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EXHIBIT 18

Change in Number of Employee Questions Due to ACA* (n=624)

Increased significantly 15.2%

Increased somewhat 37.2%

Stayed the same 44.1%

Decreased somewhat 1.6%

Decreased significantly 1.9%

*Change in the number of questions by participants to the human resources/benefits 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 benefits change? Is this benefits 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 benefits 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 benefits 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/benefits staff has been receiving from employeesregarding ACA.


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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 significantly 6.9%

Increased engagement/interest slightly 35.7%

No change 51.0%

Decreased engagement/interest slightly 1.0%

Decreased engagement/interest significantly 0.5%

Not sure 5.0%


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VI. Reactions to Health Insurance Exchanges

Employer reacions o he healh insurance exchanges and he play or pay provisions o ACA are explored in hissecion. Beginning in 2015, larger employers (100 or more ull-ime employees) ace penalies (generally $2,000 peremployee) i hey do no offer minimum essenial coverage o heir employees and any o heir employees receivea subsidy o obain coverage hrough a healh insurance exchange. Employers wih 50 o 99 employees are alloweda ransiional year; penalies will go ino effec beginning in 2016. Tese employer requiremens are conroversial.Supporers mainain he play or pay requiremen will srenghen he employmen-based sysem by giving more

workers access o improved healh coverage. Criics mainain he requiremen will increase business coss.

Survey resuls show mos employers will coninue o provide employees wih healh insurance in 2015 when heprovisions become effecive (Exhibi 22). Nearly hree-quarers o respondens (74%) repor hey definiely willconinue o provide healh care coverage or all ull-ime employees in 2015indicaing a seady increase in confi-dence since 2012, when his figure was 46.2%. An addiional 19.7% sae hey are very likely o coninue o providehealh care coverage or all ull-ime employees in 2015. Fewer han 1% o respondens say hey definiely will noprovide coverage o all ull-ime employees in 2015, and only 2.2% say hey are unlikely o. Smaller employers areslighly more likely o be considering disconinuing coverage (Exhibi 23). Exhibi 24 reveals some uncerainyregarding employer-sponsored coverage five years rom now, however, mos organizaions say hey are somewhalikely (20.7%), very likely (51%) or definiely will (22.1%) coninue coverage.

Among he respondens considering use o he exchanges in 2015, more are likely o coninue o provide coverageand encourage only some employees o ake coverage hrough he exchanges as opposed o dropping coverage orall employees (Exhibi 25). Only 4.3% o employers repor hey definiely will coninue o provide coverage bu

encourage some employees o seek coverage hrough he exchanges in 2015An addiional 20.4% say hey are verylikely or somewha likely o do so. Jus 3.3% o employers are a all likely o drop coverage or all employees in 2015.

I is ineresing o noe ha among he small group o 67 employers wihou employer-sponsored healh insurancein 2014, more han hal (55.2%) say hey very likely will offer coverage in 2015. Anoher 19.4% say hey are some-

wha likely o do so.

Te 162 respondens ha did no sae ha hey definiely will coninue o provide coverage o all ull-ime em-ployees in 2015 were asked o rae he likelihood o offering a financial subsidy i coverage is dropped and he moslikely cause or disconinuing he coverage. Mos organizaions (70.4%) say hey likely or definiely would providea subsidy. (Exhibi 26). Te mos common reason given or possibly disconinuing coverage is he cos becomingoo highcied by 57.4% o respondens (Exhibi 27). Abou one-quarer sae he reason hey would mos likely

end coverage is i oher organizaions in heir indusry or geographic area disconinued coverage (19.8% and 3.7%,respecively). Larger organizaions are more likely o be concerned wih he acions o ohers in heir indusry whilesmaller organizaions are more likely o be solely ocused on coss (Exhibi 28).

Te 462 respondens ha saed hey definiely will coninue o provide coverage o all ull-ime employees wereasked heir op reasons or mainaining coverage (Exhibi 29). espondens overwhelmingly chose hree reasonsor mainaining coverage: o reain curren employees (76.8%), atrac uure alen (72.7%) and mainain/increaseemployee saisacion and loyaly (55%). Muliple respondens seleced oher and wroe ha providing coverage

was simply he righ hing o do ehically.


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Only 3.8% o organizaions currenly use privae exchanges or heir ull-ime employees, bu 16.5% are consideringhis opion (Exhibi 30).

EXHIBIT 22

Likelihood of Continuing Coverage for All Full-Time Employees by Year* 2012 2013 2014

(n=927) (n=879) (n=624)

Definitely 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%

Definitely 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

Definitely 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%

Definitely 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)

Definitely will 22.1%Very likely 51.0%

Somewhat likely 20.7%

Somewhat unlikely 4.3%

Very unlikely 1.9%

Definitely wont 0.0%


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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.

Definitely will 4.3%

Very likely 6.3%



Very unlikely 36.7%


Our organization will drop coverage for all employees and direct them to the exchanges.


Very likely 0.6%



Very unlikely 13.1%


*In 2015 (or 2016 for transitional employers).

EXHIBIT 26

Likelihood of Offering Subsidy if Coverage Is Discontinued* (n=162)


Very likely 32.1%



Very unlikely 14.2%


*Respondents that said they definitely will continue coverage were not asked this question.


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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 becomingtoo 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 definitely continue coverage were askedthis question.


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EXHIBIT 30

Provide Coverage Through a Private Exchange for Full-Time Employees (n=624)

Yes 3.8%


No 79.2%

Not sure 0.5%


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VII. Retiree and Part-Time Employee Coverage

Employer sraegies or reiree and par-ime employee populaions are examined in his secion. More han one-hird o responding organizaions (36.2%) provide some orm o reiree coverage, while 63.8% offer no coverageo reirees (Exhibi 31). Mos employers currenly offering reiree coverage have no made a firm decision wheherhey will coninue hrough 2015 (Exhibi 32). Seven in en (69.6%) say hey definiely will or are very likely oconinue providing reiree coverage hrough 2015, and 15% are somewha likely. Fewer han one in six (15.3%) aresomewha unlikely, very unlikely or definiely won coninue o provide coverage o reirees. egarding privae ex-changes, 12.3% are currenly using his opion or reirees aged 65 and over, 8.8% have his in place or uure reireesand 8.4% are using or early reirees (ages 55-64) (Exhibi 33). An addiional one-quarer (25.6%) are consideringprivae exchanges or early reirees (ages 55-64), 22.5% are considering or uure reirees and 18.9% are considering

or reirees aged 65 and over.More han one-hird o responding organizaions (36.2%) provide coverage o par-ime employees (Exhibi 34).Tree-quarers o organizaions (74.4%) say hey definiely will or are very likely o coninue providing coverageo par-ime employees hrough 2015, and 17.3% are somewha likely (Exhibi 35). Less han one in en (8.5%)are somewha unlikely, very unlikely or definiely won coninue o provide coverage o par-ime employees. Only4.9% o organizaions currenly use a privae exchange or heir par-ime employeesAn addiional 11.5% areconsidering his opion (Exhibi 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%



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EXHIBIT 32

Likelihood to Continue Current Retiree Coverage* (n=227)


Very likely 38.8%



Very unlikely 7.0%


*Only respondents that currently have some form of retiree coverage were asked this question. Respondents were asked theirlikelihood 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, but considering 25.6%

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.


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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%


*Only respondents that currently offer coverage for part-time employees were asked this question. Respondents were asked theirlikelihood 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.


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VIII. Grandfathered Plans

I an organizaion had a leas one individual enrolled in a group healh plan or healh insurance coverage when ACAwas firs enaced (March 23, 2010), he plan or coverage is considered grandahered. Tese plans are generallyexemp rom reorm requiremens such as firs-dollar prevenive benefis, new grievance and appeals processes andnondiscriminaion provisions. Grandahered plans also have delayed effecive daes or cerain changes.

Te porion o organizaions wih a primary plan ha is grandahered has seadily declined over he las ouryearsmoving rom 44.6% in 2011 down o 17.8% in 2014 (Exhibi 37). Exhibi 38 shows ha larger employersare slighly more likely o mainain grandahered saus.

Because hey will be able o make only limied healh plan changes, mainaining grandahered saus can be a chal-

lenge or employers.7More han one in five employers wih a grandahered plan (23.4%) anicipae heir plan willlose his saus in 2015 or sooner (Exhibi 39).

When asked o ideniy up o wo advanages o mainaining grandahered saus, respondens said he op advan-ages are he exempion rom he requiremen o provide prevenive care coverage wih no cos sharing or annuallimis (25.2%) and he exempion rom implemening he appeals process (15.3%) (Exhibi 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 grandahered saus or cuting or reducing benefis, raising coinsurance charges, raising copaymen charges, raisingdeducibles, lowering employer conribuions and adding or ighening an annual limi on wha he insurer pays.


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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 Benefits of Maintaining Grandfathered Status* (n=111)

Exempt from requirement to provide coverage for

specified 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 benefits 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 nonnetworkfacilities without prior authorization and at the same cost-sharing levels asin-network facilities 9.9%

Avoid application of Internal Revenue Code Section 105(h) nondiscriminationrules 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 benefit requirements applicable in 2014 4.5%

Dont see value/benefits of being classified 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.


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IX. Cost Impact

While he impac o ACA varies rom one employer o he nex, i is generally agreed he law will increase plan cossin he shor erm. Te porion o employers ha have conduced an ACA cos analysis has grown seadily rom lesshan hal (47.2%) in 2012 o more han wo-hirds (69.9%) in 2014 (Exhibi 41). Larger employers are more likelyo have conduced an analysis (Exhibi 42).

Exhibi 43 examines he coss o a specific group o respondens ha said hey knew heir exac cos change due oACA in 2014 and does no include respondens ha esimaed cos changes. Among his group, cos changes rangedrom an increase o 50% o an overall decrease in coss resuling rom ACA in 2014. Te average cos increase amonghis group is 6.8%, and he median cos increase is 4%.

Exhibi 44 displays coss or all responding organizaionsincluding respondens ha esimaed coss. Mos orga-nizaions (88.2%) expec he law will increase heir healh care coss his year. One in our (24.7%) esimaes a cosincrease o 1% o 2%. A similar proporion (22.3%) predics an increase o 3% o 4%. One in seven organizaions(14.4%) esimaes a cos increase greaer han 10%. Coss associaed wih ACA appear o be hiting smaller em-ployers much harder han larger ones. Esimaes o cos increases associaed wih ACA rose rom 2012 o 2013 buremained airly consisen rom 2013 o 2014 (Exhibi 45).

espondens submited a wide range o responses when asked o share heir organizaions experience wih ACA-relaed healh care cos changes or 2014, reflecing he variaion in cos impac displayed in Exhibi 46. On he onehand, several respondens expressed maddening rusraion wih cos increases, describing how i made my som-ach urn or how he impac is akin o a sharp sick in he eye. On he oher hand, some relaed a differen experi-ence saying, everyhing has been very posiivewe welcome he changes. Mos were somewhere in he middledescribing a minimal, or a leas absorbable, impac his year bu expressing concern or anicipaed uure coss.Several respondens menioned how insurance companies pass coss o plan sponsors, and several also menionedhow heir organizaions pass coss o employees. A large number o respondens menioned he angible cos burdenassociaed wih he ransiional reinsurance and PCOI ees; a similar amoun described he significan ime andeffor hey have devoed o keeping complian wih consanly changing provisions, saying he sof coss o admin-israion and communicaion have been subsanial. Lasly, one quoe seemed o cleverly and concisely summarizeresponses: Everyone says play or pay, . . . well we are playing AND paying.

espondens idenified ransiional reinsurance ee coss (42.9%), general ACA adminisraive coss (33.3%) andincreased PCOI ees (32.5%) as he op hree ACA cos drivers or 2014. Muliple respondens seleced oher anddescribed he increased coss associaed wih new employees oping or plan coverage due o he individual mandae.

When asked which uure provisions would increase coss he mos, he op hree responses were coss associaedwih he excise ax on high-cos group healh plans (17.3%), general ACA adminisraive coss (12.5%) and ransi-ional reinsurance ee coss (10.6%) (Exhibi 47).

Exhibi 48 reveals ha more han wo in five employers (42.9%) expec 2015 o be he year ha will produce hegreaes cos increases due o ACA. Abou one in five (21%) expecs 2018he year o he Cadillac axo be he

year producing he greaes cos increases resuling rom ACA. One in six (14.4%) expecs coss o increase he moshis year (2014), and a similar porion (14.6%) is looking a 2016.


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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 changewere included in this table.


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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 clearerinterpretation. 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 clearerinterpretation. Organizations that have not analyzed the cost implications were asked to estimate.


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EXHIBIT 46

Provision With Most Significant 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 notification 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 spentinteracting with participants regarding ACA 13.1%

Costs of eliminating annual limits on essential health benefits 9.1%

Costs of limiting annual participant out-of-pocket maximums to theamounts specified 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 benefits 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 previouslywere 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 andpreventive 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 benefits 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.


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EXHIBIT 47

Forthcoming Provision With Most Significant 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 previouslywere not offered coverage in order to comply with 2015/16 coverage requirement 6.3%

Costs of adjusting benefits to keep up with affordability requirement 5.4%

Costs associated with reporting, disclosure and notification requirements 4.8%

PCORI fees 3.8%

Ongoing costs associated with eliminating all preexisting conditionexclusions for all enrollees 3.5%

Costs associated with requirement to autoenroll new hires into a health plan 2.9%

Costs of adjusting benefits 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 resourcesspent 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 andpreventive 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 carecoverage 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.


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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%


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X. Demographics

Individuals invied o paricipae in he 2014 survey were single employer (including corporae) represenaives inhe daabases o he Inernaional Foundaion and he Inernaional Sociey o Cerified Employee Benefi Special-iss (ISCEBS). esponses were received rom 691 individuals including benefis and human resources proessionals,general and financial managers and oher proessionals. Exhibis 49 hrough 52 presen demographic characerisicso he respondens organizaions. Surveyed organizaions were asked in which ype o medical plan he majoriy oheir paricipans are enrolled (Exhibi 49). More han hal (53.3%) sae mos o heir employees are enrolled in apreerred provider organizaion (PPO). Nearly one in our (22.8%) uses some sor o HDHP as heir primary medi-cal planFewer han 1% use an HDHP wih no accoun, while 22.4% use an HDHP wih an HSA or HR. 8

Exhibi 50 shows ha organizaions rom all regions o he counry were represened in he survey: Midwes(31.3%), Norheas/Mid-Alanic (26.2%), Souh (23.1%) and Wes (19.2%). Surveyed organizaions are dispersedacross all employer-size caegories (Exhibi 51). Mos common were hose wih beween 500 and 4,999 benefis-eligible employees (41.8%) ollowed by hose wih 51-499 employees (24%). As shown in Exhibi 52, a wide rangeo indusries is represened by he responding organizaions. Mos requen are hose rom insurance and relaedfields (16.4%), manuacuring and disribuion (13.7%), and healh care and medicine (10.6%).

8. A high-deductible health plan (HDHP)is a lower cos insurance arrangemen ha eaures a higher annual deducible han ha o aradiional healh insurance arrangemen. HDHPs were creaed o provide affordable coverage or healh evens ha migh resul in financialhavoc on a household. Wih an HDHP, he insured pays or nearly all medical expenses unil he annual deducible amoun is reached.Te deducible is usually a leas $1,000; hen radiional healh insurance coverage begins. An HDHP may be offered wih a health savingsaccount (HSA)or a health reimbursement arrangement (HR). An HSA is a ax-exemp rus or cusodial accoun esablished or individuals

who are covered under an HDHP meeing specific ederal requiremens. Conribuions o he accoun may be made by he employer and/or he employee. Te employee, no he employer, owns he accoun, which makes he accoun porable. An HR is a ax-exemp arrange-men esablished by and unded by employers or employees and reirees o pay qualified medical expenses. Money remaining in a HR a

year-end can roll over and be used o cover uure medical coss, bu he porabiliy o he accoun is lef o he discreion o he employer.


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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%


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EXHIBIT 52

Primary Industry (n=691)

Accommodation/food service 2.0%

Agriculture 0.4%

Arts/entertainment/recreation 1.7%

Banking/finance 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%

Nonprofit 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 Impactis he fifh in a series o repors on he impac o healh carereorm legislaion on single employer benefi plans by he Inernaional Foundaion o Employee Benefi Plans.eaders are encouraged o wach or upcoming sudies and o monior he Foundaions websie, www.iebp.org, orhe laes ACA news, analysis and addiional resources.

ACA Survey

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