Abbott listed three unknown factors about the tax that employers should learn more about:

The excise tax is based on both employer and employee premium contributions, not just what the employer pays for coverage
The definition of what's included for calculating the tax extends to tax-advantaged health care accounts such as flexible spending accounts, health reimbursement accounts and pretax contributions to a health savings account. The tax is not determined by the value of the medical plan but rather the value of all affected health benefits elected by an employee or family. Ultimately, the tax is determined by the aggregate value of the programs an employee elects, not just the medical plan value itself.
Annual increases in the excise tax thresholds are not based on health care cost inflation, but instead on the Consumer Price Index, which was 1.5 percent for 2013 — far less than medical cost trend and considerably less than the 4 percent annual health care cost increase that the better performing employer health plans are expected to achieve in 2015 after plan changes.

"With so much at stake, it is critical that companies take a close and comprehensive look at their health programs and understand their projected costs going forward. It also highlights the need for companies to improve their health program performance to achieve or maintain a high-performance health plan," Abbott said. "The good news is that many have already taken steps and with proper plan management the impact of the tax can be significantly mitigated."

Instant Insights /

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