A new survey of small business owners has uncovered a surprising consequence of the Affordable Care Act (ACA) on their operations — a trend to increase employer contributions to their retirement plans.
In fact, the survey, conducted on behalf of the Nationwide Retirement Institute (NRI) by Harris Interactive, finds that nearly half — 43% — say they’ve already increased their retirement plan contributions as a result of the ACA.
The report explains that employer respondents believe that their ability to offer competitive medical benefits has diminished as employees have realized that their health benefits are less attractive than the government plans provided under the ACA. To compensate, many of these businesses with 50 to 299 employees are already increasing the contributions to their employee retirement plans.
However, NRI’s “2015 Small Business Owners Survey” also notes that about a quarter (27%) say they have or will need to drop retirement benefits as a result of the federal health care law.
The ACA currently requires businesses with at least 100 full-time employees to offer health insurance; in 2016, companies with 50 or more employees must do the same. But the online survey of 334 small business owners revealed that:
- Two-thirds (67%) believe the ACA will make it more difficult to offer competitive medical benefits.
- Nearly two-thirds say their employees already consider their health benefits less attractive.
- Forty-four percent say a greater need exists now to offer employee benefits than before the ACA was adopted.
Change Coming
Eighty-four percent of small businesses with at least 50 employees reported that they already have made health care plan changes as a result of the ACA. Among other findings:
- More than three quarters (77%) expect to make additional changes within the next two years.
- Four in five that use or plan to use exchanges report having to drop several benefits in order to use private health insurance exchanges.
- Sixty-two percent say they have or will need to drop some type of health benefit.
The ACA also is changing the mix of employees at small businesses with 50 to 99 employees. Nearly one-fourth (24%) say they plan to replace full-time employees with part-timers and 16% intend to pare their workforce over the next two years because of the ACA.
Perhaps reflecting the lack of preparedness many small business owners express, more than three-quarters (77%) of those with 50 to 299 employees believe retaining an advisor familiar with the ACA would benefit their company, and 72% would like to talk personally talk to an advisor about the impact of the ACA on their company.
