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Are you prepared for the Cadillac Tax?
Percentage of employers offering Health Benefits with Plans that would exceed HCPT thresholds with 5% Premium Growth
"As fall approaches, we can expect to hear more about how employers are adapting their health plans for 2016 open enrollments. One topic likely to garner a good deal of attention is how the Affordable Care Act’s high-cost plan tax (HCPT), sometimes called the “Cadillac plan” tax, is affecting employer decisions about their health benefits. The tax takes effect in 2018.
The potential of facing an HCPT assessment as soon as 2018 is encouraging employers to assess their current health benefits and consider cost reductions to avoid triggering the tax. Some employers announced that they made changes in 2014 in anticipation of the HCPT, and more are likely to do so as the implementation date gets closer. By making modifications now, employers can phase-in changes to avoid a bigger disruption later on.
Some of the things that employers can do to reduce costs under the tax include:
- Increasing deductibles and other cost sharing
- Eliminating covered services
- Capping or eliminating tax-preferred savings accounts like Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), or Health Reimbursement Arrangements (HRAs)
- Eliminating higher-cost health insurance options
- Using less expensive (often narrower) provider networks
- Offering benefits through a private exchange (which can use all of these tools to cap the value of plan choices to stay under the thresholds).
For the most part these changes will result in employees paying for a greater share of their health care out-of-pocket."
Credit to Gary Claxton and Larry Levitt and KFF.org, Aug 25, 2015
Chart info provided by KFF.org