Employer-sponsored plans likely to trigger Cadillac tax, affect insurers

Employers expect healthcare benefits to increase 6 percent next year--and if they don't take action to contain costs, at least one of their offered health plans will reach the threshold that triggers the Cadillac tax in 2018, according to a survey from the National Business Group on health.

The survey, which questioned 425 large employers nationwide, also found that many businesses expect to increase benefits 5 percent by making plan changes such as adopting consumer-directed health plans and promoting wellness programs.

But for 48 percent of employers who do not make plan changes, their existing benefit packages will trigger the Cadillac tax--which is a tax on plans that exceed $10,200 for an individual--in 2018. By 2020, 72 percent of employers expect one of their plans will result in the tax, the survey finds.

"Employers only have two more years to bend the cost curve before the excise tax goes into effect in 2018," Brian Marcotte, president and CEO of the National Business Group on Health, said in the statement. "And while employers are pursuing several strategies to keep their plans under the excise tax threshold, they estimate their actions will only delay the impact by two to three years."

Employers are doing what they can to avoid paying the Cadillac tax. Because the tax has in practice led to workers paying more out-of-pocket costs, many companies aim to get rid of certain pricey plans. The George Washington University, for instance, no longer offers its most generous plan as to avoid paying the tax.

If the 40 percent excise tax is implemented as planned in 2018, insurers may have to change their benefits package to include more plans featuring narrow networks and high-deductibles. If the tax is repealed, employers will likely have insurers change the types of plans they offer to employees.

For more:
- here's the survey's announcement

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