Employers in the retail and hospitality industries face the greatest cost
increases when provisions of the health care reform law imposing financial
penalties on employers that do not offer qualified coverage go into effect in
2014, according to a survey released Wednesday.
Forty-six percent of employers in the retail and hospitality industries and
40 percent of employers in the health care services industry expect health care
cost increases of at least 3 percent due to health care reform law requirements,
according to the Mercer L.L.C. survey of 1,203 employers.
By contrast, just 24 percent of government employers anticipate cost
increases of 3 percent or more.
Many retail and hospitality industry employers face a "double whammy" due to
the upcoming health care reform law requirements, said Beth Umland, Mercer's
director of research for health and benefits in New York, in an interview.
Some will face stiff cost increases as they must extend coverage to employees
who are not eligible for coverage currently. In other cases, the coverage they
provide, such as through what are known as mini-med plans, will
not meet 2014 standards. That includes a ban on annual dollar limits on
essential benefits as laid down by the Patient Protection and Affordable Care
Act.
Employers that do not offer qualified coverage face a $2,000 assessment per
full-time employee—those working at least 30 hours a week—starting in 2014.
Forty-six percent of retail and hospitality industry employers said they will
need to change their health care plans to comply with the requirement that
coverage be extended to those working at least 30 hours a week.
"Extending coverage to more employees will be a significant new expense for
these employers," Tracy Watts, Mercer U.S. health care reform leader in
Washington, said in a statement.
On the other hand, only 6 percent of all survey respondents and 9 percent of
retail and hospitality industry employers said it is likely they will drop
coverage in 2014.
The cost-savings may not be that significant and fears of losing their
competitive edge are the key reasons why the overwhelming majority of employers
intend to continue coverage, Umland said.
In addition, some employers are concerned about the challenges employees
would face if they had to buy coverage through public insurance exchanges
that are to be set up by 2014, Umland said.
The survey also found that nearly 75 percent of employers are on schedule or
have completed 2013 health care reform law requirements that impose a $2,500 cap
on flexible spending account contributions as well as reporting health care plan
cost information on employees' W-2 wage and income statements.
Jerry Geisel writes for Business
Insurance, a sister publication of Workforce Management.
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