Risk & Compliance

Employers Wouldn’t Alter Health Benefits upon ACA Repeal

Not even a repeal of the unpopular employer mandate would spur most companies to change their health benefits strategies.
David McCannMay 23, 2017
Employers Wouldn’t Alter Health Benefits upon ACA Repeal

As Congress continues to consider repealing and replacing the Affordable Care Act, most employers expect to retain some of the law’s popular provisions, even if a new law does not require them to.

According to a new survey of 666 employers by Willis Towers Watson, approximately one-third of employers are not sure of their future plans for health benefits. But far more of them plan to keep popular provisions than make changes.

For example, if unlimited lifetime benefits are repealed, employers are more than three times more likely to keep them in place (50%) than they are to reinstitute lifetime dollar limits (15%). And if contraceptive care at a 100% benefit is repealed, employers are nearly six times more likely to maintain coverage at that level (59%) than they are to reduce it (11)%.

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The survey also found that were the age-26 dependent coverage rule to be repealed — which is not expected to be an element of a potential replacement bill — more than twice as many employers would keep the eligibility age at 26 (48%) than lower it (22%).

All of those ACA provisions have had a positive impact on employee engagement, and employers that don’t maintain them will be viewed negatively from an overall rewards standpoint, says Julie Stone, a national health care practice leader at Willis Towers Watson.

“As we see an increased focus on employee productivity, employers will be careful about the implications of change — not just from a dollars and cents perspective, but in terms of employee perceptions,” Stone notes.

Even if certain ACA provisions that have been unpopular with employers are repealed, they are unlikely to respond with changes to their broad health-care strategies. For example, if there is a repeal of the mandate for employers to provide affordable, essential health benefits, as defined by the law, only 6% said they are very likely to make such changes and 13% said they are somewhat likely to do so.

If restrictions on offering stand-alone or premium health reimbursement accounts for active employees are eliminated, just 4% of employers are “very likely” and 13% are “somewhat likely” to alter their current health-care strategy.

And if limits are placed on the dollar amount of employer-sponsored premiums that are exempt from federal income and payroll taxes, relatively few employers would make broad changes. Just 16% of survey participants said they are “very likely” and 31% are “somewhat likely” to do so if the tax exclusion is capped.

“Employers are confident they’ll be providing health care for the near future and are hesitant to commit to changes until they see the big picture,” says Stone.

“Whatever provisions a new law might include, most employers will stay on their current path to build a high-performing health-care program. Improving plan design value and creating program efficiencies will remain core components of an effective long-term health-care strategy.”