Retirement Plans

Companies Still on Fence Over Health-Care Reform

Though lots of prep work looms for compliance with the Affordable Care Act, many companies are still unsure of the best approach to health-care ref...
Kathy HoffelderOctober 7, 2013

PHOENIX — Companies are carefully evaluating health-care reform, but they’re not changing their benefits plans much yet. So said Jan Siegmund, the CFO of Automatic Data Processing (ADP), who spoke at CFO’s CFO Rising West conference yesterday.

Even the minority of companies that have significant decisions to make on health care next year are biding their time. Those include employers with more than 50 full-time-equivalent workers that haven’t been offering health benefits to employees, which they will be required to do for 2015 plan years under the Affordable Care Act or pay a $2,000-per-employee annual penalty.

In fact, Siegmund cited ADP Research Institute studies revealing that even those companies that may not offer insurance to all employees and are hovering around the 50-employee threshold are holding off on decisions on whether to lay off staff, prepare to offer insurance, or pay the penalty.

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Most companies that do offer health benefits will continue to, although perhaps in modified ways, Siegmund said. One strategy is capping hours for part-time workers at 29 per week, as those who average 30 or more hours must be offered health benefits. Companies both small and large are taking that tack. “The Affordable Care Act should generate a good discussion around how to manage part-time employees,” he said.

Also, companies are increasingly charging more for spouse coverage or excluding spouses from health benefits altogether. As an example he pointed to United Parcel Service (UPS), which said in August that it plans on dropping health-care coverage for spouses who have access to employer-provided coverage elsewhere.

Similarly, some companies that offer retiree benefits are switching their ex-employees to private health-insurance exchanges. Siegmund cited IBM and Time Warner as trend setters for that cost-saving strategy.