As employers face growing challenges trying to balance employees’ well-being with containing benefits-related company costs, many are seeking guidance on how to manage the administrative and compliance requirements of the Affordable Care Act.
And as the health care law continues to evolve, be it through Congressional bills or Supreme Court rulings, employers are battling a number of reforms and regulations, and 60% of employers say they need help managing the ACA landscape, according to the Guardian Workplace Benefits Study.
“As employers adapt to the ACA, we’re seeing greater adoption of private exchanges and self-funded medical plans paired with stop-loss insurance, so employers can deliver the workplace benefits their employees rely on while addressing the challenges they are facing,” says Ray Marra, Guardian’s senior vice president, group products.
As companies reassess their approach to benefits, the report notes, three trends are gaining momentum: increased outsourcing, interest in private exchanges, and consideration of self-insurance.
“The ACA has intensified challenges for a majority of employers,” Marra says. “They must deal with administrative and compliance requirements, trying to offer employees wider benefits choices and an effective enrollment experience and controlling costs.”
The study notes one in three employers expects to outsource more aspects of their benefits program as a direct result of the ACA. Nearly 70% of employers expect greater compliance and administrative burdens because of the law.
Also see: “Boosting benefits enrollment with technology.”
And the market for benefits outsourcing appears to have considerable room for expansion, according to the report. Only 16% of all employers are engaged in a “high level” of outsourcing (where all administration tasks are outsourced to a vendor), while at the other end of the spectrum, just 15% report doing no outsourcing.
Companies with fewer than 1,000 employees are more likely than larger companies to outsource their benefits administration to a single third-party administrator (36% versus 22%), according to the report. Nearly half (47%) of employers that outsource all of their administration and enrollment tend to use a single vendor compared to 25% of those doing just a little to no outsourcing.
Also see: “Budget reconciliation sought for ACA repeal.”
“It’s important for brokers to provide guidance on emerging options for funding and delivering employee benefits which can help employers respond,” says Marra.
In addition, some other key findings from the report include:
- About 20% of employers expect to offer benefits on a private exchange in the next year. Top reasons are to increase employee choice and to improve the employee experience. Seven in ten employers say it is highly important to offer benefits that meet their employees’ personal needs and help them make better benefits choices.
- Of those thinking of self-insuring, 58% say the ACA is the impetus and half of those planning to self-insure expect to carry stop-loss insurance. Self-insuring medical plans is a less common funding option for smaller firms but is receiving increased attention due to the ACA. Seventy-eight percent of employers expect benefit cost increases due to the ACA, impacting an employer’s health benefits offering.
- A tailored benefits and communication approach is becoming increasingly critical to address employees’ financial needs at different points in their work stages.
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