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Employers are Struggling to Understand the ACA

medium_7458319270LANSING, Mich.–(Business Wire)–A new report explores public employers’ implementation of the Affordable Care Act (ACA) and ongoing efforts to manage health costs and other post-employment benefits (OPEB) liabilities.

The report, Health and OPEB Funding Strategies: 2014 National Survey of Governments, shares the experiences and efforts of 1,536 municipalities, school districts, state governments, and others from across the United States. The nonprofit Cobalt Community Research coordinated the research and collected the data through random sampling. 2014 is the 6th year of the study.

Key findings:

  • Rising Revenue: 33% of the respondents expect 2015 revenue to increase, up from only 13% in 2011. Only 17% expect a revenue drop, unlike the 43% in 2011.
  • Even Employment Levels: Very few governments are expecting increased employment (7%), but very few expect a decrease in employment as well (5%).
  • Rising Health Costs: 50% of respondents experienced over 4% increase in health costs for 2014, and 56% expect an increase over 4% for 2015.
  • Mediocre Cost Management: Respondents rate the effectiveness of their efforts to control health costs at a 5.1 (10 is the highest rating). This is flat from 2011.
  • Soft ACA Understanding: ACA knowledge is limited. Respondents rate their knowledge at 4.5 (10 is high).
  • Taking First Steps: Employers offering coverage have responded to the ACA with compliance reviews, testing to meet minimum value, and calculating ACA costs. Nearly half are developing strategies for part-time and seasonal employees because of the 30-hour per week requirement.
  • Sharing Education and Costs: Very few employers are eliminating coverage or moving toward an exchange, and fewer than 10% are considering an exchange in the next two years. Most changes include: increasing share of the premium, increasing deductibles, increasing copays, tightening drug formularies, increasing employee/retiree education, and wellness programs.
  • Prefunding on Hold: 61% of respondents are choosing not to prefund benefits, up from 51% in 2011. For those who are prefunding, the percentage of prefunded liability has declined. About 59% of those setting aside assets are managing them in a general fund account, up from 49% in 2011.

Cobalt Community Research is a nonprofit research coalition based in Lansing, Michigan. The study was made possible through the support of the following organizations: BlueCross BlueShield Association, Cavanaugh Macdonald Consulting, the Employee Benefit Research Institute, the Government Finance Officers Association, Ice Miller, the Municipal Employees’ Retirement System of Michigan and the National Conference on Public Employee Retirement Systems.

At Essential Personnel we are working tirelessly on keeping our clients informed and up-to-date on ACA policy, implementation deadlines and changes. If you would like more information on how we can save you time and administrative burdens, contact your consultant today.


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