The looming Cadillac tax is making some companies more cautious when it comes to contributing to workers’ health savings accounts.
Since 2014, HSA enrollment has increased 10.7%, according to new survey data from United Benefit Advisors. The survey of more than 10,000 employer-sponsored health plans find that, overall, enrollment in HSAs is increasing, while employer contributions, on average, are stagnant or decreasing.
The Affordable Care Act’s Cadillac tax, set to go into effect in 2020, is having two effects on employers, says Niko Washington, vice-president of the employee benefits practice at Johnson & Dugan, a California-based UBA partner firm. “It’s making high-deductible health plans more attractive because of the low premiums,” he says. “However, it’s also causing employers to contribute less to HSA accounts connected to HDHPs [because] if an employer and employee contribute too much to an HSA, it can tip the Cadillac tax threshold.”
Looking at HSA performance by industry, the UBA survey finds:
- Singles/families in the accommodation/food services industries received virtually no support from employers, with average HSA contributions at $149 and $172 respectively.
- Government employers offer the most generous contributions at an average $834 for singles and $1,636 for families.
- While most industries have seen steady growth in HSA enrollment, the utilities sector not only has the lowest enrollment at 3.2%, but is also the only industry to see a decline in enrollment from three years ago.
“I expect we’ll continue to see employer contributions to HSAs decline as most employers are trying to steer employees to an HRA [health reimbursement arrangement] instead,” says Dan Cattaneo, CEO of Beneflex Insurance, also a UBA partner firm, in California.
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