Perhaps the most debated provision of the Affordable Care Act, the Cadillac tax, is at the forefront of discussion among employers and politicians across the country. The 40% excise tax on high-cost health plans offered through the workplace doesn't go into effect until 2018--but employers are already taking action. A new survey of employers from the International Foundation of Employee Benefit Plans found:
1. They are doing the math. Nearly nine in ten organizations (87%) said they've done calculations to see if their plans will trigger the tax, and 60% will. Among those, most (62%) will trigger the tax right away in 2018 and another 12% will do so in 2020.
2. They have a game plan. A little more than one-quarter (27%) report they've done the calculations, and they won't trigger the tax; in several cases it's because they've already changed their plans to avoid it. Among those triggering the tax, two in five organizations (40%) are working on changes to avoid the tax, and another 40% plan to start making changes before 2018.
3. They aren't paying up. Only 5% aren't planning to make any changes and instead will just pay the 40% tax.
4. They are changing it up. Almost half (46%) are trying to hold down overall plan costs by shifting more costs to workers via coinsurance, copayments and the like. Two in five (39%) are moving to a high-deductible health plan, one-third are reducing benefits, and nearly one-third (31%) are dropping higher cost plan options.
Employers are taking action now because making the changes needed to avoid the tax can be time consuming and challenging--and may have big implications for their workers. With only 5% of employers reporting that they plan to pay the Cadillac tax, many Americans can expect to see changes to their employer-sponsored health plan. Full survey results are available on the International Foundation's website.