Imagine this scenario: You are a homeowner and have beenpenalized by your insurance carrier with higher premiums becauseyou have engaged in routine maintenance of your property, such askeeping the gutters cleared so as to prevent water damage.

Or consider another scenario, where you are a car owner and yourinsurer increases your rates because you have been carefullyfollowing the owner’s manual suggested maintenance schedule for thevehicle.

In both of these examples, the logic behind these scenarios iscounterintuitive, counterproductive, and yields undesirableoutcomes.

Similarly, under the terms of the so-called “Cadillac tax,” which is a component ofthe Patient Protection and Affordable Care Act (PPACA), the samecounterintuitive philosophy is at play and will increasinglypresent challenges to companies that seek to promote moreproductive and healthier employees.

Set to take effect in 2018, the Cadillac tax is a punitive 40percent non-deductible excise tax on the cost of employer-sponsoredhealth coverage that exceeds predetermined threshold amounts,currently $10,200 for individual coverage and $27,500 for familycoverage. Clearly this tax is intended to disincentivize employersfrom providing these high-cost (hence, “Cadillac”) plans. But thequestion is, how will employers respond?

If these plans are taxed once a certain threshold is reached,then aren’t employers incentivized to cut the benefit? Essentially,visiting the doctor is being punished because those who are morelikely to see a physician are the ones who have a plan thatprovides coverage. And with health care spending increasing yearafter year, it is probable that more individuals will start toexceed the preset premiums threshold. However, preventive healthcare may be able to mitigate the burden of this tax without forcingemployers to cut benefits.

Research studies have demonstrated that effective preventivehealth care specifically designed for the early detection of healthconditions and risks and effective management of chronic disease conditions can reducethe health care cost burden of employers and employees, therebyside-stepping the Cadillac tax. Preventive health care rewardsindividuals who take the time to maintain their health by keepingthem from getting sick. And indeed, PPACA mandates that healthplans cover a set of preventive services. In other words, you caneither spend a little now or a lot more later.

When companies proactively promote employee health, theyincrease productivity; reduce absenteeism and its cousin,“presenteeism” (going to work despitebeing sick, which risks infecting others); and reduce costs.Moreover, healthier employees are less likely to use vacation timeowing to illness and or to miss work caring for ill family memberswho also benefit from the health-promotion initiatives. Thisproactive approach brings to mind the old adage “A stitch in timesaves nine.”

Companies that spend more on preventive services — routine,age-specific prescreening exams, travel medicine, health coaching,and behavioral modification programs that ‘nudge’ employees to seekrecommended follow-up treatments (e.g., dermatological screenings)— should be encouraged to do more of this type of health care.While incorporating a comprehensive preventive health care plan mayincrease short-term costs, it will reap long-term returns in theform of more productive employees and a reduction of costs bymitigating the repercussions of the Cadillac tax.

The Cadillac tax is scheduled to take effect in 2018, so there’sample time for those employers who have not already done so tobegin health and wellness campaigns with their employees for bothhealth and financial benefits.