Benefits Administration | Costs and the HR Compliance Burden Are Going Up for Employer-Sponsored Healthcare

ADP Research Institute®

Costs and the HR Compliance Burden Are Going Up for Employer-Sponsored Health Care

This insight is from: "HR Compliance: Are Employers Ready for Health Care Reform?"

We’re already seeing major landscape changes in the employer health care landscape and more are on the way. At the top of the list: complying with the Supreme Court’s June 2012 ruling that upheld the constitutionality of the Patient Protection and Affordability Care Act (the ACA), and controlling the escalating cost of providing employee health care.

To gain insight into the attitudes and behaviors of employers regarding certain upcoming ACA requirements and the impact of employer-sponsored health care cost increases, the ADP Research InstituteSM, a specialized group within ADP, surveyed human resources and employee benefits decision makers on the eve of the Supreme Court decision. The survey includes a national sample of small (1-49 employees), midsized (50-999 employees), and large (1000+ employees) companies.

Read the Fact Sheet, which summarizes the survey findings, to see how companies of all sizes are dealing with these major challenges. Then ask yourself how prepared is your company regarding ACA compliance and how effectively are you helping to control your company’s health care costs?

Seeing a Profoundly Different U.S. Health Care Landscape

An old proverb says, “May you live in interesting times.” The human resources and employee benefits decision makers participating in ADP’s survey appear to agree. More than half, in companies of all sizes, said they are witnessing “profound changes” in the U.S. Health Care landscape. In fact, survey respondents indicated these changes are likely to transform U.S. health care fundamentally.

The ACA Is at the Epicenter of Health Care Changes

For most human resources and employee benefits professionals across all sized companies, the constitutional validation of the ACA by the Supreme Court was unexpected. No more than 10% of professionals surveyed were expecting the Supreme Court to uphold the entire law. Consequently, companies may be behind in their ACA preparations. Furthermore, four out of ten respondents in large companies and only half that many in small and midsized organizations feel highly confident that they understand employer responsibilities mandated by the Health Care Reform law.

Even more stunning is the low level of awareness in many companies when it comes to specific, upcoming ACA-related HR compliance requirements. For example, about two-thirds of human resources and employee benefits decision makers in small and midsized companies conceded they are not aware of the ACA requirement (in March 2013) to notify employees of the establishment of Public Exchanges. Even a third of respondents from large companies said they were unaware.

Moreover, the ACA is forcing employers to examine the costs of the employee-sponsored health care benefits they now provide. Expect a growing discussion of high-cost insurance offerings, referred to as “Cadillac” plans, which will carry a 40% excise tax levied on insurers and third-party administrators of self-insured plans – a cost that most expect will be passed on to employers.

Increases in Health Care Costs Seen as Threatening the Attainment of Business Goals

This ADP Research Institute survey found that the increasing cost of employer-sponsored health care has expanded well beyond a cost-containment discussion. Clearly, these burgeoning costs are increasingly affecting business decisions, some perhaps that are strategic. On average, at least seven out of ten human resources and employee benefits decision makers believe the cost of providing employer-sponsored health insurance is a barrier to their company’s achievement of its business goals.

The Fact Sheet reveals that companies of different sizes deal with health care cost containment in different ways. Survey findings show that larger companies are more likely to have a formal plan or strategy in place to help control or lower employer-sponsored health care costs.

About this Fact Sheet: The data and conclusions come from a recent survey conducted by the ADP Research Institute, a specialized group within ADP that provides insights for leaders in both the private and public sectors around issues of human capital management, employment trends, and workforce strategy. See the Fact Sheet for details on research methodology.

Keywords: Benefits Administration, Compliance, Health Care Reform

Business Types: Research for Small Organizations, Research for Midsized Organizations, Research for Large Organizations

Roles: Research for Human Resources Professionals

HR Compliance: Are Employers Ready for Health Care Reform?

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