Introduction. Table of Contents

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2 Introduction While uncertainty about the long-term impact of the Affordable Care Act (ACA) remains, employers are starting to observe and measure the impact of the law in the workplace. When faced with the prospect of providing coverage for employees or paying a fine (the play or pay rules), a majority of employers decided to play. This year, respondents reported more comfort with the ACA, including higher levels of confidence in understanding, complying with and administering the law in the workplace. Seventy percent of respondents indicated that they are confident in their compliance with current ACA guidelines. The number of respondents reporting that broker services are very important for ACA education and assistance remained high, with many relying directly on their brokers to provide these essential services. This percentage would likely increase should there be additional changes to the law. The 2016 Affordable Care Survey was conducted in early 2016 and a total of 930 respondents completed the survey. Table of Contents Introduction... 2 Demographics...3 Broker-provided Services...4 Health Plans.. 6 Pay or Play Decision..7 Costs....8 Compliance...9 Section 6055 and 6056 Reporting. 10 Health Insurance Exchanges.11 SHOP Exchanges..12 Community Rating Restrictions 13 Workplace Wellness.14 Cadillac Tax Strategies 15 Health Care Reform Administration.16 Overall Changes Affordable Care Act Survey Results 2

3 Demographics This survey was completed by employers in all 50 states and the District of Columbia. The majority of survey respondents were from organizations with less than 500 employees. In which region is your organization based (the most employees)? 10% 6% 7% 15% 22% 13% 14% 9% 4% How many employees does your organization employ? In which industry or sector does your organization operate? What is your organization's annual revenue? 2016 Affordable Care Act Survey Results 3

4 Broker-provided Services How important is it that your benefits broker provides your organization with the following services in respect to the Affordable Care Act (ACA)? Very Important Important Slightly Important Not Important Offering legislative updates to educate on the ACA and its implications Offering educational seminars about the ACA and its implications Modeling the financial impact of the ACA on your organization, including possible penalties Helping educate employees on the ACA reforms and their implications Helping develop a health benefit strategy and multi-year implementation plan for active employees Providing decision support tools to help employees evaluate their options Helping adopt and implement a consumer driven health plan (CDHP) to drive down costs Helping implement workforce health improvement or wellness initiatives 74% 20% 4% 1% 55% 31% 11% 3% 63% 27% 7% 3% 42% 36% 18% 5% 50% 33% 12% 5% 42% 36% 17% 5% 28% 35% 24% 12% 26% 33% 29% 12% Helping prepare the summary of benefits and coverage (SBC) 54% 26% 11% 9% When you have a question regarding the ACA, where do you turn? 77% 40% 11% Call or my broker My client portal Search the Internet 2016 Affordable Care Act Survey Results 4

5 Which services, with respect to the ACA, is your broker currently providing? Offering legislative updates to educate on the ACA and its implications Offering educational seminars about the ACA and its implications Modeling the financial impact of the ACA on your organization, including possible penalties Helping educate employees on the ACA reforms and their implications Helping develop a health benefit strategy and multi-year implementation plan for active employees Providing decision support tools to help employees evaluate their options Helping adopt and implement a consumer driven health plan (CDHP) to drive down costs Helping implement workforce health improvement or wellness initiatives Not Providing Partially Providing Fully Providing 10% 27% 62% 26% 32% 42% 27% 34% 39% 37% 36% 27% 36% 32% 32% 36% 35% 29% 47% 27% 26% 41% 36% 23% Helping prepare the summary of benefits and coverage (SBC) 30% 37% 33% 2016 Affordable Care Act Survey Results 5

6 Health Plans The number of respondents indicating they will not make changes to their health plans funding mechanisms in the next year increased 10 percent since 2014 perhaps because employers are feeling more comfortable with the ACA. In addition, the number of organizations offering high deductible health plans (HDHPs) continues to grow as more employers look to contain rising health care costs. The number of employers offering health coverage to employees working 40 hours or more per week fell by 3 percent from 2014 to 2016, while the number offering coverage to employees working 30 to 39 hours a week increased by 12 percent. Do you plan to make any changes to the funding mechanism for your primary health plan in the next year? How is your largest group health plan funded? What types of health plans does your organization currently offer? Which active employees are offered coverage under your organization's health plans? 2016 Affordable Care Act Survey Results 6

7 Pay or Play Decision Beginning in 2015, employers with 50 or more full-time equivalent employees are required to offer affordable, minimum value health coverage to full-time employees or possibly pay a penalty. The implementation of this ACA provision has not significantly affected employer offerings, though. In fact, the percentage of organizations who definitely plan to continue to offer health coverage to employees increased 5 percent since Likelihood of Continuing Health Benefit Coverage Only 1 percent of employers plan to discontinue health benefit coverage and pay any applicable penalties. The two main reasons for keeping coverage include the ability to retain current employees and maintain or increase employee satisfaction. How likely is your organization to continue offering health benefit coverage to your employees over the next three years? If you plan to keep coverage, what are your reasons for doing so? If you plan to discontinue coverage, what are your reasons for doing so? 2016 Affordable Care Act Survey Results 7

8 Costs More than 70 percent of respondents noted that changes required by the ACA have increased their organizations health benefits costs, or that they expect future increases up 3 percent since Sixty percent of respondents said they are passing cost increases along to their employees in the shape of increased total health care costs paid by employees and increased employee premium contributions. Have the changes required by the ACA increased your organization's health benefit costs or do you expect them to do so in the future? Forty percent of respondents indicated that they are reducing health benefits and programs for example, by changing plan options, increasing deductibles or copays, and restricting eligibility. About 43 percent of respondents said that they are absorbing some of the increased costs themselves. This move may be motivated by company s efforts to boost retention and recruitment. Other popular responses included organizations increasing the prices of their products or services and reducing the number of fulltime employees on their payroll. What are the actions your organization has taken/plans to take in response to increased health benefit costs caused by the ACA? 2016 Affordable Care Act Survey Results 8

9 Compliance Employers confidence in their ability to comply with ACA provisions has increased to 70 percent a 4 percent gain since The number of respondents signaling that they are very confident they can comply with future ACA provisions increased by a similar amount (4 percent), but still remains under the 50 percent mark. How certain are you that your organization is currently in compliance with the ACA's effective provisions? How prepared do you consider your organization to be for compliance with future ACA provisions? 2016 Affordable Care Act Survey Results 9

10 Section 6055 and 6056 Reporting Beginning in 2016, the ACA requires health coverage providers (such as self-insured plan sponsors) to fulfill complicated reporting requirements regarding the plans they provide. Many employers are confused about what information needs to be reported and how to accurately submit this information. Less than 50 percent of respondents said that they are confident in their ability to satisfy reporting requirements, and 32 percent of employers responded that they did not know which ACA reporting requirements their organization must comply with. Are you filing electronically? Which of the following ACA reporting requirements must your organization comply with? How comfortable are you with your understanding of the reporting requirements? How are you doing the reporting? How confident are you in your ability to satisfy the reporting requirements? 2016 Affordable Care Act Survey Results 10

11 Health Insurance Exchanges Private exchanges are marketplaces where employees can shop around and compare and purchase health insurance and other voluntary benefits. While the number of employers currently using or considering using private exchanges has remained relatively constant in this survey for the past few years, Oliver Wyman a global management consulting firm estimates that by 2018, 40 million people will be enrolled in private exchanges. Of the 11 percent of respondents who use private exchanges, 14 percent said that they experienced a decrease in their health care costs an 8 percent increase from The increase in cost-savings may indicate that implementation and administration of private exchanges are becoming easier, which may encourage others to join the private exchange market in the future. Are you considering moving to a private exchange in the next three to five years? 90% No Yes 10% Have you experienced a decrease in health care costs since moving to a private exchange? Do you currently use a private exchange to provide benefits to your active employees or retirees? 89% No Yes 11% 2016 Affordable Care Act Survey Results 11

12 SHOP Exchanges Many respondents are reluctant to use, or are unsure about using, the Small Business Health Options Program (SHOP) Exchange. Over half of respondents are currently shut out from the SHOP Exchanges because they do meet the eligibility requirements, one of which includes having up to 50 employees. If purchasing coverage through the SHOP Exchange in the future, how would you prefer to select and offer a plan? Of those companies that are eligible, though, 45 percent of respondents were unlikely or very unlikely to purchase coverage through a SHOP Exchange in the future, compared to 13 percent who were likely to use a SHOP Exchange or already have. When asked how they would go about selecting coverage through a SHOP Exchange, 60 percent of employers preferred to use a broker. Are you eligible to provide coverage through the SHOP Exchange? How likely are you to offer coverage through the SHOP Exchange? 2016 Affordable Care Act Survey Results 12

13 Community Rating Restrictions Community rating is a way for insurers to calculate the cost of health insurance premiums based on a variety of communal, rather than individual, factors. Nearly 30 percent of respondents said community rating restrictions have increased costs, compared to 18 percent of respondents who said that their costs have decreased or stayed the same since community rating restrictions were implemented under the ACA. Roughly the same number of respondents said the same is true for the effect of community rating restrictions on the cost of health care for their employees. In both cases, the majority of respondents are unsure of the impact of community rating restrictions on health care costs, and only 3 percent of respondents reported the community rating restrictions have led to lower costs for employees. How have the new community rating restrictions affected the health care costs of your organization? How have the new community rating restrictions affected the health care costs of your employees? 2016 Affordable Care Act Survey Results 13

14 Workplace Wellness Since 2014, employers have been allowed to increase employee wellness program rewards or penalties to 30 percent of the cost of coverage (up from the prior limit of 20 percent). The number of respondents who are either likely or very likely to create or expand their wellness programs as a result of this change fell to 15 percent in 2016 (down 3 percent since 2014). Even adjusting for the number of employers that said they already have implemented a wellness program, the number represents a decline in enthusiasm from previous years. More than half of employers noted they are unlikely or not very likely to implement a wellness program because of the ACA provision. Has the change to increase employee wellness program rewards or penalties to 30 percent of the cost of coverage prompted your organization to create or expand your workplace wellness program, or will it in the future? Likelihood of Implementing a Workplace Wellness Program Over 3 Years 2016 Affordable Care Act Survey Results 14

15 Cadillac Tax Strategies In 2020, the ACA will levy a 40 percent excise tax on health plans that are deemed to be overly generous. This tax, also known as the Cadillac tax, will affect health plans that cost more than $10,200 for individual coverage and $27,500 for family coverage. Many employers (32 percent) have not yet finalized a strategy for navigating the Cadillac tax. Those who have, though, said they plan to avoid the tax by either partially or fully reducing the scope of health of benefits. Only 1 percent of employers plan to pay the full amount of the Cadillac tax to maintain current employee health benefits. What strategy will your organization use to navigate the Cadillac tax? What is the likelihood that your organization will need to reduce coverage to avoid the Cadillac tax? Likelihood That Organization Will Reduce Coverage Over 3 Years 2016 Affordable Care Act Survey Results 15

16 Health Care Reform Administration The top two health care reform provisions employers said they were most concerned about were Section 6055 and 6056 reporting as well as other reporting, disclosure and notification requirements. Other major topics of concern included premium rating changes and health plan fees. Of respondents who answered other, the reasons listed included tracking employee hours and further rule changes. Which ACA provisions are you most concerned about implementing and administering? Employer Concerns Over a 3-year Period 2016 Affordable Care Act Survey Results 16

17 Overall Changes Many employers plan to make organizational changes as a result of health care reform. For instance, 43 percent of employers said they planned on switching to a defined contribution model on a public or private exchange. Interest in wellness-based care also remained high, with 40 percent of respondents indicating that they are considering this option. As far as staffing, though, the ACA has had less of an impact than many initially projected. In fact, 35 percent of respondents noted that they have already made or are planning to make hiring and staffing changes not related to the ACA. Does your organization plan on doing any of the following as a result of the ACA? Have Already Done It Plan On Doing It Don t Plan On Doing it Don t Know Not Applicable Hiring fewer total employees 7% 3% 69% 8% 12% Terminating current employees 2% 1% 81% 5% 11% Hiring more part-time employees 8% 9% 64% 9% 11% Changing full-time employees to part-time employees 2% 2% 79% 5% 11% Hiring more total employees 5% 12% 59% 14% 11% Making hiring and staffing changes not related to the ACA 13% 22% 36% 17% 12% Contact your broker to discuss how the information in this survey can help you make future benefit plan decisions. Are you considering any of the following options for the future? This survey was conducted in early This survey was anonymous, so responses have not been validated for statistical significance or margin of error Zywave, Inc. All rights reserved Affordable Care Act Survey Results 17