The shadow of the Cadillac tax appears to be growing despite the fact that it won't go into effect until 2018. An analysis of health plans covering 13 million employees or retirees projects that nearly 20 percent of the plans reviewed will trigger the tax by 2020.
Truven Health Analytics conducted the study and reviewed claims data from 2,600 self-funded plans to determine whether the levy, an excise tax mandated by the Patient Protection and Affordable Care Act, would be triggered. The tax would be imposed on plans considered to be unusually rich by PPACA standards.
Truven said 15 percent of active employee plans that it reviewed would be immediately subject to the tax upon its activation in 2018, barring plan redesigns. The amount would increase to 19 percent by 2020, the study forecast. Cost per employee would be as much as $480 per year, Truven said.
Plans covering retirees would be hit even harder: 81 percent would be subject to it in 2018 and 84 percent in 2020, Truven said. Cost per employee would be $1,069.
"It's critical to effective planning for budgeting, collective bargaining and benefit strategy that employers begin now to gain a solid understanding of which plans are likely to incur the tax and when each plan's costs may be likely to cross the excise thresholds," said Chris Justice, Truven's senior director of practice leadership. "By implementing a combination of benefit plan changes, premium contributions, and health risk interventions, you can mitigate the impact of this new tax in 2018 and beyond."
—Dan Cook
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
