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Life Health > Health Insurance

Early PPACA costs fall hardest on small business

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Employers are finding that just trying to explain the Patient Protection and Affordable Care Act to employees is one of the costliest ramifications to date.

Helping employees understand PPACA placed right behind the fee employers have to pay for the Patient-Centered Outcomes Research Institute and administrative costs incurred during implementation as the most-expensive single elements related to the law this year.

That comes from a survey by the International Foundation of Employee Benefits Plans. The foundation calculated responses from 728 benefits plan experts, primarily human resources and benefits professionals at companies with single-employer plans.

The foundation found that 69 percent of the companies already have analyzed how the law will affect their bottom line, and of those, 50 percent had pinpointed the cost factor on their business this year.

One in seven that had analyzed costs said the law either failed to change their benefits cost structure or actually lowered it. Medium to large corporations generally said the cost impact was below 5 percent, while small businesses reported a much greater impact, often exceeding 15 percent.

The costs themselves revealed much about the widespread difficulties everyone from the White House to the local mom and pop grocery is having when trying to explain the details of the law to workers.

Employers identified the top three costliest provisions as:

  • The Patient-Centered Outcomes Research Institute fee — 38 percent;
  • General administrative costs — 35 percent;
  • Explaining provisions to participants — 28 percent.

And how do employers plan to respond to these and other potential benefits plan cost increases? Far and away their top choice will be to shift costs to employees (53 percent of respondents), with “encouraging participant health by increasing wellness and value-based health care initiatives” second at 36 percent.

The foundation saw this latter response as a very positive sign for the future of corporate health plans.

“This push for employee participation in wellness programs is a trend we have been tracking for several years now,” said Julie Stich, research director with the foundation. “Our 2012 survey on wellness found that seven in 10 U.S. employers offer wellness programs as a benefit to employees and with ACA implementation only months away, trends indicate this number will only continue to increase as employers look for ways to rein in costs.”

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