More than half of employers have not calculated their costs under the Patient Protection and Affordable Care Act, but of those that have, 61% say PPACA has increased their expenses. According to a survey of 1,200 employers by the Willis Human Capital Practice, a majority, or 60%, of employers would like to avoid increases in spending on their group plans.

Only 20% of respondents plan to adjust benefits outside of health care, such as retirement, dental, vision, salaries and vacation. Willis leaders believe employers may be using faulty “perceptions of cost” when making their calculations.

“Employers are still coming to terms with the impact of health care reform, and many employers still seem to function in a ‘shock mode,’” says Jay Kirschbaum, practice leader at Willis. While few employers consciously manage their group medical benefits as a component of their total rewards perspective, survey responses indicate the very beginning of an employer trend in this direction.”

Other findings include:

  • Of the employers who say PPACA has increased their costs, 17% say those increases are over 5%.
  • 34% of employers say they will shift benefits costs to employees, while 55% felt that competitors should do so.
  • 39% are choosing to voluntarily forego grandfathered status, due to a desire to control plan design and other elements such as co-pays and premiums; last year, only 13% of employers made this decision. Willis says this increase drastically exceeds the Department of Health and Human Services predictions.
  • Most employers are intending to play under the pay-or-play mandate.

“The survey suggests that employers continue to recognize the value of providing medical benefits, how important those benefits are to their employees and that providing benefits allows them to attract and retain the employees they need,” Kirschbaum says. “Therefore, they generally plan to continue offering competitive medical benefits. However, they are considering several potential options, even including the possibility of coverage through state exchanges.”

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