ACAs ‘Cadillac Excise Tax Will Hit Lower-Cost Health Plans, Practitioners Say. Key Point: ACAs excise tax on health plans will affect more than high-value plans. Takeaway: Tax may lead some employers to adopt methods to curb health-care costs. Oct. 10 — The Affordable Care Acts excise tax that starts in 2018 should be called the “Camry” tax—not the “Cadillac” tax—because it is going to affect more than just high-cost plans, a practitioner said at a conference on employee benefits. The ACAs excise tax under §4980I is pegged to the Consumer Price Index for All Urban Consumers (CPI-U), and not to overall health costs, which have been rising at a much faster clip that the CPI-U, said Helen Morrison, a principal with EY LLP in Washington. This means that even plans with only a 70% actuarial value—a silver-tier plan under the ACA—will reach the excise tax threshold soon after 2018, depending on which geographic region they are in, Morrison said Oct. 9 at a meeting of the American Bar Associations Joint Committee on Employee Benefits. Employers should begin planning now, if they havent already, to deal with the reality of the excise tax, Morrison said. The first step employers need to take is to collect data on their plans, before making any decisions about what methods or products to adopt to curb costs, Morrison said. Coverage Dropping dependent coverage for spouses, for example, would seem intuitively to make sense as a tactic to lower plan costs, Morrison said. Employers that exclude working spouses from coverage may save money in the short term by cutting the number of covered lives, but the long-term effect of this strategy is less clear, according to a study from the Employee Benefit Research Institute. Wellness plans have gained in popularity, but the jury is still out on the degree to which they can lower plan costs, said Joanne L. Hustead, vice president and deputy leader of Segal Group Inc.s National Health Compliance Practice in Washington. Employers may find that disease management will offer “the biggest bang for the buck,” Hustead said. Other wellness strategies include culture change, such as demonstrating management support for a healthy employee culture; behavioral modification, such as providing incentive to promote health behaviors; increasing communications about health; and health status metrics, such as biometric screening. Although completely eliminating coverage is a possibility, the vast majority of large employers havent terminated health-care coverage for full-time employees, Morrison said. Some large employers may be holding off on this decision while waiting to see if other companies drop coverage, she said. However, some large companies have eliminated coverage for their part-timers, including Wal-Mart Stores Inc., Target Corp. and Home Depot Inc. There is no single “silver bullet” that will control costs, but there are many opportunities, Morrison said.
Posted on: Mon, 20 Oct 2014 02:37:47 +0000
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