Do You Know Your Numbers?
Industry-specific rate increases related to ACA are predicted to range from just over 5% for those in the Biotech/Pharmaceutical industry to upwards of 10% for those employers in the Manufacturing and College/University industries. Employers who are not at high risk for eligibility and sufficiency penalties will begin to see increases as fees kick in and the cost of benefits start to rise.
WHAT’S DRIVING THESE COSTS?
In general, for employers with large populations of employees who are not being offered benefits, their primary cost increases will come from the penalties resulting from the Employer Mandate. Employers who are not running into eligibility or sufficiency issues will see general cost increases as a result of fees that are built into the law (e.g., PCORI, Transitional Reinsurance, Health Insurer fee), as well as from newly enrolled employees on the employer sponsored plan.
As a blend of all employers across industries, the following is a breakdown of total cost increases*:
- 11% generated as a result of affordability/sufficiency penalties
- 14% generated from fees
- 33% generated from eligibility penalties
- 44% generated from ACA plan cost increases
PREPARING FOR ACA
As employers look to control costs,various strategies are being adopted to offset future rising premiums. A few of the growing trends within the employer community are the adoption of health improvement programs, modifying contribution strategies and altering plan design offerings to employees. Regardless of the strategy, it is critical for employers to develop a multi-year approach to deal with the implications of reform. This includes taking necessary actions to avoid the excise tax.
*Source: MMA national employer database, November 2012 – December 2013