Employers to modify retiree health benefits in light of ACA: survey

Over the next three to five years, the Affordable Care Act will likely have little impact on the health of the employed population as employers report they will continue to offer health care benefits. However, a large share will find ways to reduce costs through new approaches for the retiree population, according to a new survey from Aon Hewitt.

As the ACA’s employer mandate will continue in 2015 — with some slight delays for organizations with fewer than 100 employees — approximately 95% of employers questioned in Aon Hewitt’s recent health care survey say they plan to push forward with offering benefits for active employees and retirees.

By 2019, two-thirds of employers hope to continue the same level of benefits for both part-time and full-time employees, while 38% plan to halt benefit coverage to the part-time population.

However, almost 40% plan to move their benefits structure to a platform that will force employees to take a more active role in their health by offering fewer plan options. One opportunity cited by one-third of the 1,230 employers surveyed is to provide group-based health benefits through private exchanges over the next three-to-five years. Currently, only 5% of employers use private exchanges to cut costs, according to the talent, retirement and health business of Aon plc.

“Employers remain committed to providing health benefits, but recognize the need for new approaches that fix those problems,” says Jim Winkler, Aon Hewitt’s chief innovation officer for health and benefits.

Planning for retirees

A separate retiree health care survey of 424 employers, also conducted by Aon Hewitt, shows many employers plan to gradually move their more 3.8 million retirees to individual health coverage options.

Twenty percent of employers plan to send portions of their pre-65 retirees to state and federal exchanges, says John Grosso, leader of Aon Hewitt’s retiree health care task force.

“Our clients, and large employers in general, want to see a couple of years of stability before they can be confident to send pre-retirees there, which is essentially an endorsement of the public marketplace to get coverage,” Grosso explains in a phone interview.

For post-65 retirees, Aon Hewitt says that employers will continue to draw down subsidized retiree health benefits in favor of the individual Medicare plan market. Approximately two-thirds say they will consider this multi-carrier private exchange approach and join the likes of the 30% that have already implemented this structure.