Aventria Perspectives

Cadillac Tax: Will a Compact Model Do Just as Well?

All Americans will soon be faced with some very difficult choices

Beginning in 2018, the Affordable Care Act (ACA) will enforce a 40% non-deductible excise tax on employer-sponsored high-cost health care coverage. The 40% will be applied to total contributions from employer and employees, but not cost-sharing amounts such as deductibles, coinsurance and copays when care is received.

The established thresholds, after which the tax will be imposed, are as follows:

What does this mean for employers?

Employers must adjust benefit design to stay under the thresholds or the impact of the excise tax will be:

At first impulse, employers may seek to raise employee contributions to their health plans. While that may save money, it won’t help the company circumvent the excise tax on employers because the tax is based on the total cost of plan, not just employer contributions.

For small company employers (<50 staff members), exchanges/accountable health organizations may provide a cost-effective solution, but larger businesses are required to provide health care. It appears that most employers will opt for either a high-deductible plan with no other adjustments or a high-deductible plan with stipends. A useful add-on benefit is a health care access service which can be offered to employees without affecting the health plan total cost. With this service, employees and covered lives can quickly access non-urgent care, second opinions, and chronic care monitoring with follow-up that may reduce urgent care and hospitalizations.

 

Aventria Health can provide roadmaps for the new healthcare journey

Pinnacle can be an advisor — a coach — in informing work staff about the ACA regulations. Through a variety of media, we will provide clear and essential communication that will be useful to all levels within the workforce so that the health care plan provided is understood. We will enable you to give employees the information they need to make wise decisions as they take greater responsibility for their health care.

If you would like to hear how Aventria can help you, please contact us.

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