The much-discussed and often maligned Cadillac tax – the excise tax on high-cost employer-sponsored health plans that’s a part of the Patient Protection and Affordable Care Act – has been delayed two years. It will be implemented in 2020, rather than 2018, after Congress included it in a 2015 year-end government funding package and the President signed it.
One result of this delay, for now, means less intense pressure on employers to respond immediately. It’s an opportunity for them to carefully plan controlled costs in the meantime, writes Shandon Fowler for benefitspro.com. “There is possibly no bigger challenge facing our industry than bending the benefits cost curve while maintaining or even increasing quality,” Fowler writes.
In fact, the delay may hurt employers who fail to take action on controlling their costs. They need to keep addressing the problem, writes David McCann for CFO.com. “CPI-indexed plan-cost thresholds over which the tax kicks in will continue to rise between now and 2020, despite the delay in the tax’s implementation,” he writes, and the percentage of companies affected by the tax in 2020 won’t change.
Fowler believes consumerism in health plans can empower employers to control cost, a win even as the future of the Cadillac Tax is in question. Employers can phase in such plans by allowing employees technology-based decision support, and can offer Health Savings Plans to take the bite out of high-deductible, high-premium plans.
“When employers provide a sizable (and tax-deductible) contribution to an employee’s HSA, it can provide employees with first-dollar expense coverage and, over time, help them to build a healthcare nest egg so that they’re truly prepared for the unexpected if and when it occurs,” Fowler writes. But more important is to show employees that these changes will still offer them excellent coverage while helping to control employer costs.
New products featuring solutions like gap coverage and telemedicine may ease such transitions even further. “Plus, new methods of providing benefits, like defined contributions inside or outside of private exchanges, combine for more choices for health coverage, before even getting to ancillary benefits offerings,” Fowler writes. “Benefits professionals have more options than ever, as well as the decision support they need to make the options both work and be cost-effective to employer and employee alike.”
Fowler suggests companies start now to address plan costs, regardless of what they expect or hope to happen to the Affordable Care Act. “The status quo is unsustainable,” Fowler writes. “Action is needed, and has been needed for quite a while, to curb costs and maintain great employee benefits without perpetuating the decades-long upward cost curve.”