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.

[Image credit: Fotolia]
[Image credit: Fotolia]

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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