Employers find loopholes to avoid paying Cadillac tax

Costs shifting to employees before tax takes effect in 2018

Come 2018, the tax on so-called Cadillac plans goes into effect. This is causing many large employers to rethink how they offer health insurance to their employees.

The tax on such plans initially was introduced to slow the healthcare spending growth. But now employers are doing what they can to get out of paying a hefty 40 percent surcharge on insurance plans that exceed $27,500 for a family or $10,200 for an individual, reported Bloomberg.

Even though the tax has caused a slowdown in premium growth since implementation of the Affordable Care Act--last year, average family premiums rose 3 percent to $16,834, while single premiums remained at $6,025--employers with high-wage employees paid, on average, $6,244 for single coverage, noted the article.

Because the tax has in practice led to workers paying more out-of-pocket costs, many companies are getting rid of certain pricey plans. The George Washington University, for instance, not longer offers its most generous plan as to avoid paying the tax, added Bloomberg.

Harvard University, too, now requires its faculty members--health economists and policy experts who advised presidents and Congress on healthcare reform--to pay more out-of-pocket expenses as to adhere to the ongoing trend in employer-sponsored insurance.

Some companies also force employees to pay more by assessing penalties to workers who do not comply with wellness program requirements. New Jersey-based Honeywell plans to fine workers $500 who do not undergo biometric screenings, while it also plans to withhold up to $1,500 annually in company contribution to employees' health savings account should an employee refuse to undergo blood pressure or cholesterol tests, FierceHealthPayer previously reported. Such plans are not without controversy--the U.S. Equal Employment Opportunity Commission took Honeywell to court, but a judge upheld the Honeyell program.

While the tax "is having the effect that was intended, which is the cost of these plans are being reduced," Christopher Condeluci, a former Senate Republican aide who helped design it, told Bloomberg, "sadly, the way in which they're being reduced is they're shifting more costs onto the employees."

For more:
- here's the Bloomberg article

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