Almost one-fifth of employers who were contacted by a benefits manager say they will drop their group health insurance plans when the insurance exchanges come into being in 2014.

At the same time, 70% of employers contacted by Lockton, a Kansas City-based brokerage and consulting firm, say they are “apprehensive” about the reform law’s mandates. They say that the ability of the exchanges to offer federally subsidized coverage to most workers will give employers the flexibility to terminate group coverage.

The Lockton survey found that the employers who responded to the survey are “frustrated” that the law makes health plan administration an even more costly and burdensome endeavor than it is now. Indeed, 80% of responding employers say they are “concerned” or “very concerned” about the additional administrative obligations health reform will require of them, Lockton officials say.

Other aspects of the law that are of high concern to respondents include the cost impact of the 2010-11 benefit mandates (elimination of dollar maximums, coverage of adult children, etc.) and the potential cost impact of automatic enrollment in 2014, the survey found.

Mike Brewer, president of the Lockton Benefit Group, says that “for many employers, as they become more aware of the law’s requirements and costs, the level of concern is escalating.”

More than 40% of Lockton Benefit Group’s client-companies, representing a wide range of industries, responded to the confidential survey, the company says.

On the positive side, the Lockton survey found that its employer-clients look forward in 2014 to the reform law’s increase in permissible health-related wellness incentives to 30% from 20% of the total cost of an employee’s coverage.

Responding employers also say they will appreciate the insurance exchanges offering a coverage option to part-time or otherwise benefit-ineligible workers in 2014; and supplying employers with a way to eliminate pre-65 retiree coverage, knowing their retirees have another option for subsidized health insurance, Lockton officials say.