Not surprisingly, employee benefit advisers are predicting the Affordable Care Act will negatively impact group medical insurance sales, and many are now saying they expect fewer employers in the future will offer medical benefits at all.
Seven out of ten employee benefit advisers predict that health care reform will have a negative impact on sales of group medical insurance, according to a survey by industry researcher LIMRA. The group polled its employee benefit adviser panel.
Advisers who represent employers with fewer than 50 employees are especially concerned about the impact of the ACA, with 77% saying it will have a negative impact on group benefit sales, compared with 62% of advisers who represent larger employers with 50 or more employees.
Of the surveyed advisers, 55% also say its likely or very likely that fewer employers will offer medical benefits in the future. Advisers who sell in the small-group market were more apt to believe so, with 60% of small-group advisers predicting fewer employers will offer medical benefits, while just 48% of advisers who sell in the larger market say that is a likely outcome.
The ACA reform measures imposing additional taxes, fees, penalties and mandatory coverage are not easily sustainable from a financial perspective, for small employers, says Robin Frick, an adviser at Combined Benefits Administrators Inc. Those employers simply cannot afford to absorb the health insurance premium increases as a result of the legislation, nor can those employers necessarily afford to pay penalties for failure to provide ACA-compliant health insurance or have employees gain coverage through the exchange.
According to the LIMRA survey, employee benefit advisers anticipate that about 20% of their employer clients will shift to health care exchanges, as will 40% of their individual clients.
Frick agrees, saying she believes some small employers may cease offering health insurance and encourage employees to purchase through the exchange simply because it will become harder and harder to afford the coverage.
Three-fourths of advisers also believe that as a result of health care reform, more employers will make any non-medical benefits they offer 100% voluntary in the future.
The survey was conducted in the fourth quarter of 2013.
