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PPACA: ADP Finds More Fear at Midsize Employers

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The Patient Protection and Affordable Care Act of 2010 (PPACA) seems to be scaring midsize employers more than it’s scaring larger employers.

Analysta at an arm of Automatic Data Processing Inc. (ADP), Roseland, N.J., have published data supporting that conclusion in a summary of results from a December 2011 survey that drew responses from 254 employers with 50 to 999 employees and 250 responses from employers with 1,000 or more employees.

ADP — a company that offers benefits administration services — asked survey participants about their reasons for hiring outside companies to help with health benefits administration.

For both large and midsize employers, “ensuring compliance” was a top reason for outsourcing.

About 34% of the midsize employers and just 29% of the large employers” cited the complexity of complying with PPACA as a reason for outsourcing benefits administration.

That reason ranked fourth on the list of reasons for outsourcing at the midsize employers and just seventh on the list of outsourcing motives at the large employers.

In the future, if PPACA takes effect on schedule, it will impose minimum coverage requirements on employers with the equivalent of more than 50 full-time employees in 2014. The new “shared responsibility” rules “will require much tighter integration across time and labor, payroll and benefits systems in order for employers to actively manage rather than be reactive to the law,” ADP analysts say.

But, even though midsize employers are more likely to cite PPACA as a reason to outsource benefits administration, large employers are more likely to say they will actually outsource some functions as a result of PPACA.

About 54% of the large employers are planning PPACA-related outsourcing moves, compared with 45% of the midsize employers.


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