One-Third of Plans Offered to Healthcare Workers Likely to Incur Excess-Benefits Tax

The excess-benefits tax on high-cost health plans could apply to as many as 33% of plans provided to employees of healthcare organizations in 2018, according to a Fact File report from HealthLeaders magazine. By 2020, the portion of plans that will incur the tax is projected to jump to 39%. Truven Health Analytics provided the data for the report.

Under the Patient Protection and Affordable Care Act (ACA), employers offering high-cost “Cadillac” plans must pay 40% on the value of part of the plan that surpasses ACA-set thresholds beginning in 2018. Threshold limits begin at $10,200 for an individual plan and $27,500 for a family plan.

“Employers also need to consider that the tax is measured as a direct function of plan cost and not actuarial plan value,” the analysis noted, “and that a number of factors can drive excise-tax exposure.”

High-cost claimants, high use of care, and high underlying unit pricing for healthcare services are among the factors that could cause expose plans to the tax, according to the article.

When it begins in 2018, the projected tax is expected to average of $452 per employee with a high-cost plan, accounting for 4.9% of the plan’s cost. By 2020, it is expected to increase to an average of $660 per employee and account for 5.2% of the plan’s cost.—Jolynn Tumolo

Reference

Fact file: impact of so-called ‘Cadillac’ tax. HealthLeaders Media. October 2014.