As anyone in the benefits industry well knows, implementation of the Affordable Care Acts Cadillac tax is nearly four years away. Despite the 2018 enforcement of this ACA excise tax on high-premium plans, multiple employers represented at the Americas Health Insurance Plans conference in Washington this week called it their No. 1 concern this year.
While hosting a panel Thursday on the impact of the ACA on employer-sponsored coverage, Mercers Tracy Watts said 40% of employers say theyre already making changes to their benefits in 2014 in preparation for this 2018 tax. Nearly two-thirds are concerned about the prospect of having to pay that tax, she added, noting these findings are preliminary results of a soon-to-be-released survey of about 700 employers.
One panelist at that same session said the excise tax is the single ACA provision thats made the biggest impact on employers benefit strategies. Its completely changed benefits, said Laurel Pickering, president and CEO of the Northeast Business Group on Health, representing 200 large employers. I think we would have gone here [eventually] but the excise tax has accelerated it.
Its a black cloud for every employer. The Cadillac wont come into play as long as you hold down increases to 3% per year and thats hard, said Mary Bradley, director of health care planning at Pitney Bowes, during a Wednesday AHIP discussion. Weve been trying to concentrate our strategy. Her company is a mailing and communications employer with about 10,000 active employees.
The benefits manager for Alcoa, Inc., an aluminum manufacturer, said in that same session that hes particularly concerned about how the tax will impact the plans for his 45,000 retirees who are on a very traditional benefits package. Scott Kovaloski said hes looking at a private exchange for them, but were waiting to do a firm analysis.
The excise tax is 40% of the cost of coverage for health plans that exceed a certain annual limit, which is $10,200 for individual coverage and $27,500 for self and spouse or family coverage, according to the journal Health Affairs. Congressional Budget Office reports throughout the last year have estimated that the tax will raise $80 billion for the federal budget deficit between now and 2023.
Mercers Watts said their preliminary findings show the most popular action employers are taking right now to prepare for the excise tax is offering a consumer-driven health plan, or touting it if they already offer one. These plans cost about 20% less than a PPO plan, she said.
Other options that employers are already implementing or looking into are raising deductibles and getting rid of higher-cost plans altogether, Watts said. Private exchanges are also an option, which according to many industry consultant surveys are getting eyed by around 30% of employers for a switch within three to five years.
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